South African Tech Industry Set To Be Impacted

The failure of negotiations between Pretoria and Washington is projected to result in a 30% tax on South Africa’s exports to the United States on Friday, August 1, 2025.

South Africa will be among the numerous nations targeted by U.S. President Donald Trump’s “Liberation Day” tariffs, should the tax adjustments be put into effect.

The information and communications technology (ICT) industry in South Africa, which relies on an intricate international supply chain, would be among the many industries affected by the levies.

The tariff increases were originally scheduled to go into effect on April 9, 2025, but the White House delayed them for ninety days in order to negotiate after a market crash. According to Trump, there won’t be any further extensions.

Parks Tau, the South African Minister of Trade and Industry, stated that South Africa has not achieved an agreement with the United States as of Thursday morning, July 31.

Tau said on a radio talk show on 702 Talk Radio, “We actually spoke to the U.S. last night, both at the level of the U.S. Trade Representative and the level of the embassy.”

“They said they couldn’t even confirm what the announcement would be.”

According to Tau, they were urged to send the U.S. government an “enhanced proposal,” which the White House would then review.

According to reports, South Africa has suggested a trade agreement that included a local investment of $3.3 billion (R59 billion) in industries such as recycling and mining.

The plan was to ask for a waiver from some tariffs, a 10-year agreement to import liquefied natural gas, and U.S. imports of blueberries and chicken.

Nonetheless, a group of Afrikaner leaders who met with high-ranking White House officials reported that the United States sought promises from South Africa on matters such as BEE and property rights.

Among the delegation were Gerhard Papenfus, CEO of the National Employers’ Association, Corné Mulder, leader of FF+, and Theo de Jager, chairman of the Southern African Agri Initiative.

They had meetings with top White House officials, including those from the Homeland Security Council, the National Security Council, and the Office of the Vice President.

There are four prerequisites for normalising bilateral relations between the United States and South Africa, according to the officials, which are;

• Farm attacks are categorised as a priority crime. In contrast to rhino poaching and cash-in-transit heists, farm attacks are not given the same priority or resources, according to White House officials. Every agricultural attack should be looked into by the Hawks.
• ANC’s unwavering public criticism of “Kill the Boer, kill the Farmer,” whether in song or elsewhere.
• No expropriation of land without just compensation. Only when all other legal avenues have been explored should expropriation be allowed to proceed.
• USA companies are exempt from any BEE (Black Economic Empowerment) regulations. USA entities should not be subject to any race-based laws that can be considered as a non-tariff trade barriers.

Prior to and following President Cyril Ramaphosa’s May meeting with Trump, the majority of these topics garnered media attention.

The South African government stated that identifying alternate markets and Treasury-backed tax incentives for the automotive and agricultural industries are part of its backup plan in the event that the 30% tariffs are put into effect.

With the influence on the ICT industry in South Africa, the tariffs will have a direct effect on South Africa’s electronics manufacturing and telecommunications equipment sectors, as well as an indirect effect on a number of other businesses, according to Vicus Grové, CEO of E-Tax Global Advisory.

These consist of business process outsourcing, cloud-based and software services, and other tech-enabled services in South Africa.

According to Grové, the most recent figures show that South Africa’s ICT sector generates an important proportion of employment and accounts for 8% of GDP.

“Several sub-sectors will be negatively impacted, even though the nation does not export a lot of finished tech hardware to the United States,” Grové told MyBroadband, which is a press media firm in South African

According to him, South Africa shipped about $460 million worth of ICT gear to the United States in 2024, primarily solar-linked microcontrollers, printed circuit boards, and telecoms assemblies.

Tariffs will severely reduce the sector’s companies’ ability to offer competitive prices. SMEs, which make up 65% of hardware exports, would be the most severely impacted, particularly if they are unable to reach other markets or economies of scale.

Grové stated that over the next 12 months, local industry associations anticipate a 12–15% contraction in exports from this segment.”

Regarding the effect on software and cloud-based services, Grové further predicted that by mid-2026, software companies’ U.S. sales could decline by 8–10% as increased expenses are passed on to end users.

“South Africa’s Business Process Outsourcing (BPO) industry generates over R25 billion annually and serves over 60 U.S.-based companies,” he said.

“This segment relies on ongoing U.S. investment and equipment imports, including call centre infrastructure and proprietary software licenses, even though it is not directly tariffed.”

Inflation brought on by tariffs may raise operating expenses, forcing businesses to renegotiate agreements or absorb losses.

Grové also shared that the industry’s objective of generating 500,000 new employment by 2030 could be jeopardised by any slowdown in new U.S. outsourcing agreements.

There will be a direct effect on the export of telecom components, including data routing units, signal processors, and antenna parts.

“In 2024, South African companies sent almost $90 million worth of telecom-grade components to the United States, mostly for rural connectivity solutions and infrastructure projects,” he stated.

Industry analysts caution that South African exports in this category may drop by as much as 30% since price-conscious American consumers are likely to look for tariff-exempt alternatives from Asia.

As the repercussions, Grové stated that it is widely believed that the auto, agricultural, and mining industries will be the most severely impacted by the U.S. tariffs. 

It will have a very detrimental impact on the local markets’ disposable income as it ripples through the SA economy as a whole.”

Grové also predicted that this will have a more significant and disastrous effect on all other areas of South Africa, including ICT in general.

We should also hope that Russian oil supply won’t put South Africa at risk of an additional 100% secondary trade tax. The true game-changer, he argued, would be that.

“Sadly, South Africa as a whole will bear the brunt of this punitive trade policy by the U.S. if the trade deal with the U.S. is not resolved in the short term.” 

Grové finally advised a caution that local companies should anticipate that tariffs are here to stay, regardless of the final and fluctuating percentages, even though a temporary agreement with the US would be appreciated.

He contended that since the United States has imposed an average tariff of 22% on almost 185 countries, our 30% tax is still feasible. “We don’t have much leverage for relief, even with the EU at 15%.”

Grové finally concluded that companies should adopt and put into practice a strong global tariff risk plan, ideally integrated into their global tax risk strategy.