NATIONAL NEWS - The United States' intention to remove South Africa from the African Growth and Opportunity Act (AGOA) from 1 January 2027, has prompted concern about the potential impact on exports, investment and employment, particularly in the Western Cape.

The Western Cape Government and its trade and investment promotion agency, Wesgro, are assessing the possible consequences following notification from the US government on 2 November.

AGOA provides eligible African countries with duty-free access to the US market for certain products. 

The trade arrangement has been particularly beneficial to South African exporters, including businesses in the agricultural and agri-processing sectors.

The Western Cape accounted for more than 50% of South Africa's agricultural and agri-processing exports to the US in 2025.

The US is also the province's largest source of foreign direct investment, an important destination for its exports and its second-largest tourism source market. These commercial and investment links support thousands of jobs.

According to the Western Cape Government, the removal of AGOA preferences could affect businesses differently. While some exporters may be able to absorb additional tariffs, others could lose their competitive advantage in the US market.

Western Cape Premier Alan Winde said the decision could have consequences for the provincial economy, particularly agriculture and agri-processing.

He said the notification was unfortunate but not unexpected, given the uncertainty surrounding South Africa's trade relationship with the US.

Several export sectors could be affected

Industry analysis by Wesgro indicates that AGOA preferences have provided significant benefits to exports of yachts, certain engine parts, citrus, wine and fruit juices.

However, these advantages have already been affected by successive US tariff measures, including tariffs of up to 30% last year and a current 12.5% tariff under Section 301 of the US Trade Act, according to the provincial government.

The Western Cape Government says it has previously engaged in efforts to retain South Africa's AGOA benefits, secure tariff exemptions for additional product categories and maintain trade relations between the two countries.

Winde said further engagement was needed to protect existing jobs and encourage investment, particularly against the backdrop of high unemployment in South Africa.

He also intends meeting with Trade, Industry and Competition Minister Parks Tau to discuss how the province could contribute to efforts to address the situation.

Export diversification gains importance

The potential loss of preferential access to the US market has also highlighted the importance of diversifying South Africa's export destinations.

Western Cape Minister of Agriculture, Economic Development and Tourism Dr Ivan Meyer said the province needed to strengthen its export base and reduce its reliance on individual markets.

The province launched its Export Strategy in July 2026, with the aim of supporting its target of becoming a R1 trillion economy and tripling exports by 2035.

Through Wesgro and the provincial departments responsible for agriculture and economic development, initiatives include exploring opportunities in African and Asian markets, helping exporters improve their competitiveness, connecting local businesses with international buyers and developing retail partnerships under the #MadeInTheCape initiative.

Figures supplied by the provincial government indicate that some of these diversification efforts are already showing results in the citrus sector.

Between August 2025 and July 2026, Western Cape citrus exports to the US declined by 10 300 tonnes, or 8%, compared with the preceding 12-month period.

Over the same period, exports to the rest of Africa increased by 17,800 tonnes, representing growth of 40%, while exports to Asia rose by 111 000 tonnes, or 21%.

The province said the overall increase in citrus exports to international markets was 33 times greater than the volume lost in the US market.

Winde said expanding into alternative markets would remain important, although diversification would take time and would need to be accompanied by continued efforts to strengthen trade relations between South Africa and the US.

The developments leave exporters and businesses facing uncertainty over future trading conditions, with the potential effects on competitiveness, investment and employment still being assessed.

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