WEBVTT 00:00:05.099 --> 00:00:08.599 Hello and welcome to the So What podcast, in 00:00:08.599 --> 00:00:11.099 which political economic analyst J .P. Landman 00:00:11.099 --> 00:00:13.919 discusses the issues uppermost in the minds of 00:00:13.919 --> 00:00:16.640 South Africans. You can find a written version 00:00:16.640 --> 00:00:19.679 of this content on J .P.'s website, jpluntman 00:00:19.679 --> 00:00:24.140 .co .za. I am Ruda Landman, and I am your host. 00:00:26.800 --> 00:00:30.620 Hello, and as always, a very warm welcome to 00:00:30.620 --> 00:00:35.490 a conversation which... goes with an extraordinary 00:00:35.490 --> 00:00:38.429 newsletter. Extraordinary in the sense that it 00:00:38.429 --> 00:00:40.969 comes only three days after the previous one. 00:00:41.270 --> 00:00:44.549 We recorded one for the 4th of April on the water 00:00:44.549 --> 00:00:47.549 situation in South Africa. This one is dated 00:00:47.549 --> 00:00:50.969 the 7th of April and the title is, of course, 00:00:51.149 --> 00:00:55.689 of Budgets and Tariffs. Why are we doing this? 00:00:56.369 --> 00:00:58.710 Because both those events, the approval of the 00:00:58.710 --> 00:01:01.310 budget in South Africa and on the same afternoon, 00:01:02.090 --> 00:01:05.370 The introduction of tariffs by Donald Trump are 00:01:05.370 --> 00:01:07.769 actually quite momentous events, each one on 00:01:07.769 --> 00:01:10.450 their own. And I thought it would be appropriate 00:01:10.450 --> 00:01:13.730 that we combine them in one newsletter and discuss 00:01:13.730 --> 00:01:16.209 both. So it's really two very different topics 00:01:16.209 --> 00:01:18.769 that are things that occurred on the same day. 00:01:19.329 --> 00:01:23.290 So first, tell us what exactly happened in Parliament 00:01:23.290 --> 00:01:26.219 on Wednesday, the 2nd of April. What happened 00:01:26.219 --> 00:01:29.680 in Parliament was that Parliament approved the 00:01:29.680 --> 00:01:31.879 fiscal framework. And what is the fiscal framework? 00:01:32.400 --> 00:01:34.900 It is basically the revenue, the expenditure 00:01:34.900 --> 00:01:37.659 and the borrowings for the coming year, financial 00:01:37.659 --> 00:01:40.459 year of the state, which must be set, has been 00:01:40.459 --> 00:01:45.620 set by Parliament. So those figures are set in 00:01:45.620 --> 00:01:47.900 stone? They are now set in stone. They are now 00:01:47.900 --> 00:01:50.420 locked. But the budget has got four approval 00:01:50.420 --> 00:01:53.829 processes. And the fiscal framework was the first 00:01:53.829 --> 00:01:56.409 approval process. And the relevance of that first 00:01:56.409 --> 00:01:59.650 approval process is, as you say, it sets in stone 00:01:59.650 --> 00:02:03.049 those three very important numbers. To what revenue 00:02:03.049 --> 00:02:05.290 do we commit ourselves? In other words, what 00:02:05.290 --> 00:02:07.730 taxes? To what expenditure do we commit ourselves 00:02:07.730 --> 00:02:11.189 or the so -called appropriations in the jargon? 00:02:11.449 --> 00:02:14.810 And then thirdly, what do we borrow? And those 00:02:14.810 --> 00:02:17.129 are really the critical numbers around the macro 00:02:17.129 --> 00:02:21.210 budget. And that was approved on Wednesday afternoon. 00:02:21.409 --> 00:02:23.110 And the way the approval works, just to give 00:02:23.110 --> 00:02:25.770 you the detail, on the previous day, the Tuesday, 00:02:25.949 --> 00:02:28.349 there was a committee meeting. Legislation requires 00:02:28.349 --> 00:02:31.629 that a parliamentary committee must meet on the 00:02:31.629 --> 00:02:34.889 framework, hear public representations, listen 00:02:34.889 --> 00:02:37.870 to people, and then make a recommendation. And 00:02:37.870 --> 00:02:39.750 that's what they did. And they recommended to 00:02:39.750 --> 00:02:42.590 Parliament that the framework be adopted. And 00:02:42.590 --> 00:02:46.009 that debate took place on Wednesday. And it passed, 00:02:46.349 --> 00:02:49.979 but only just. Yes, very interesting. The number 00:02:49.979 --> 00:02:54.139 was 194 in favour and 182 against, which means 00:02:54.139 --> 00:02:57.919 a majority of 12. Now that sounds okay until 00:02:57.919 --> 00:03:00.860 you realise that there were 24 members of the 00:03:00.860 --> 00:03:03.539 House, of the National Assembly, who did not 00:03:03.539 --> 00:03:06.439 vote. They were mainly members of MK and EFF, 00:03:06.680 --> 00:03:09.460 but they were also members from other parties 00:03:09.460 --> 00:03:12.159 who talked against the budget but walked out 00:03:12.159 --> 00:03:15.979 of the Assembly before they had to vote. So that 00:03:15.979 --> 00:03:19.139 number added up to 24. Now you can work out for 00:03:19.139 --> 00:03:21.759 yourself, if the majority was 12 and 24 people 00:03:21.759 --> 00:03:24.300 didn't vote, this thing could easily have gone 00:03:24.300 --> 00:03:27.900 a different way. So it was, as Wellington said, 00:03:28.120 --> 00:03:31.060 a damn close -run thing. That was of the Battle 00:03:31.060 --> 00:03:35.860 of Waterloo, no less. How do the approval process 00:03:35.860 --> 00:03:42.219 work from now on? There are a number of things 00:03:42.219 --> 00:03:46.050 that have to be approved. Yes, correct. As I've 00:03:46.050 --> 00:03:47.949 said, there are four rounds of approvals. The 00:03:47.949 --> 00:03:50.189 first one now was approving the fiscal framework. 00:03:50.370 --> 00:03:53.689 So that was done. The DA wants to go and challenge 00:03:53.689 --> 00:03:55.569 that in court, and we will have to see how that 00:03:55.569 --> 00:03:58.949 plays out. But Parliament has done that first 00:03:58.949 --> 00:04:01.949 approval. The second approval, which must happen 00:04:01.949 --> 00:04:05.129 within 35 days of the approval of the framework, 00:04:05.430 --> 00:04:10.349 is to approve the division of revenue. South 00:04:10.349 --> 00:04:12.449 Africa has got three levels of government, national, 00:04:12.590 --> 00:04:16.339 provincial, local. Basically, all taxes, i .e. 00:04:16.360 --> 00:04:18.560 all revenue, are collected by the national government. 00:04:18.819 --> 00:04:20.620 There's a little bit in the provinces, a little 00:04:20.620 --> 00:04:23.040 bit in local government, but essentially all 00:04:23.040 --> 00:04:26.519 revenue is collected by SARS for the national 00:04:26.519 --> 00:04:30.300 government. Then the constitution requires that 00:04:30.300 --> 00:04:33.220 that pool of money cannot just all be kept by 00:04:33.220 --> 00:04:35.399 the central government or the national government. 00:04:35.459 --> 00:04:38.980 It must divvied up to the provinces and to the 00:04:38.980 --> 00:04:42.350 local municipalities. That is the so -called 00:04:42.350 --> 00:04:44.870 equitable share. And that bill is an important 00:04:44.870 --> 00:04:47.509 one because it divides the money. And it must 00:04:47.509 --> 00:04:50.889 be adopted within 35 working days, which effectively 00:04:50.889 --> 00:04:55.129 takes it to about the 27th of May. By then, that 00:04:55.129 --> 00:04:58.209 division of revenue bill must be passed by Parliament. 00:04:58.329 --> 00:05:01.370 So that's the second one. The third level is 00:05:01.370 --> 00:05:03.990 within four months from the start of the state's 00:05:03.990 --> 00:05:06.290 financial year, which is 1 April, within four 00:05:06.290 --> 00:05:10.209 months, the appropriation bill. which is basically 00:05:10.209 --> 00:05:12.509 the expenditure of the state, must be approved. 00:05:12.889 --> 00:05:15.029 That takes us, the target date for that then 00:05:15.029 --> 00:05:17.709 will be, if you start on 1 April, will be 31 00:05:17.709 --> 00:05:20.610 July, four months later. And that's a long and 00:05:20.610 --> 00:05:24.709 tedious process where the budget gets scrutinized 00:05:24.709 --> 00:05:28.089 in detail on the expenditure side. That's where 00:05:28.089 --> 00:05:30.209 the various committees in Parliament for defence, 00:05:30.509 --> 00:05:33.769 for justice, for education, for the environment, 00:05:33.910 --> 00:05:36.230 where they go through their different budgets 00:05:36.230 --> 00:05:39.529 and screen them. and interact with the government 00:05:39.529 --> 00:05:42.329 and bureaucrats about them. So that's a fairly 00:05:42.329 --> 00:05:45.470 important and a detailed process. And then the 00:05:45.470 --> 00:05:48.310 last round has got no fixed date to it. That 00:05:48.310 --> 00:05:50.350 is the approval of the revenue bills. In other 00:05:50.350 --> 00:05:54.069 words, the approval of taxation laws. Traditionally, 00:05:54.069 --> 00:05:56.990 that is done before Parliament rises for the 00:05:56.990 --> 00:06:01.250 year. So there's a retrospective element. You 00:06:01.250 --> 00:06:03.269 approve the revenue bills, say, in September 00:06:03.269 --> 00:06:07.069 or October, before Parliament adjourns. But they 00:06:07.069 --> 00:06:09.370 apply from the beginning of the tax year, which 00:06:09.370 --> 00:06:12.569 is 1 March. And I suppose at some point, some 00:06:12.569 --> 00:06:14.870 activist lawyer will question that and say, you 00:06:14.870 --> 00:06:18.250 can't have a retroactive bill. But at the moment, 00:06:18.329 --> 00:06:20.089 that's not on the table. So those are the four 00:06:20.089 --> 00:06:23.329 levels of approval that are needed. But in the 00:06:23.329 --> 00:06:26.910 meantime, the new tax year and the new financial 00:06:26.910 --> 00:06:30.839 year start. So how does that? affect the whole 00:06:30.839 --> 00:06:33.819 process yeah a very important point the fiscal 00:06:33.819 --> 00:06:36.879 year starts on 1 april as i've said the tax year 00:06:36.879 --> 00:06:40.019 as listeners would know starts on the 1st of 00:06:40.019 --> 00:06:44.379 march now if you if you your fiscal year your 00:06:44.379 --> 00:06:46.899 financial year starts on the 1st of april but 00:06:46.899 --> 00:06:50.759 you have a tax increase only in may it means 00:06:50.759 --> 00:06:52.980 for two months you don't have you don't have 00:06:52.980 --> 00:06:56.050 the income from that increase If you now delay 00:06:56.050 --> 00:06:58.310 it from May to June, the gap becomes bigger. 00:06:58.490 --> 00:07:01.290 If you delay it to July, August, September, the 00:07:01.290 --> 00:07:03.829 gaps become very, very big. In fact, if you delay 00:07:03.829 --> 00:07:05.649 it to 12 months, there's no income from that 00:07:05.649 --> 00:07:09.370 particular tax rise. So the reality of the date 00:07:09.370 --> 00:07:14.490 is that you have to proceed with implementation 00:07:14.490 --> 00:07:18.529 of tax increases quite quickly. And that means 00:07:18.529 --> 00:07:22.129 that the half a percent VAT will be implemented 00:07:22.129 --> 00:07:25.189 on 1 May. Let's just go back and see the whole 00:07:25.189 --> 00:07:28.689 picture. The half a percent VAT increase is in 00:07:28.689 --> 00:07:30.649 your revenue number, which is approved in the 00:07:30.649 --> 00:07:33.129 fiscal framework. You must now give practical 00:07:33.129 --> 00:07:35.970 gestalt to that fiscal framework. So you've got 00:07:35.970 --> 00:07:39.490 to start the VAT increase to collect the money 00:07:39.490 --> 00:07:42.829 for the year. And that date is 1 May. And then 00:07:42.829 --> 00:07:48.089 what if Parliament after that says, no, we're 00:07:48.089 --> 00:07:51.990 not going to raise the VAT rate? Well, that'll 00:07:51.990 --> 00:07:54.189 come in the revenue bills towards the end of 00:07:54.189 --> 00:07:57.050 the year. Parliament will then have to step up 00:07:57.050 --> 00:08:00.269 and accept responsibility for the fact that there 00:08:00.269 --> 00:08:02.250 aren't enough money collected to finance the 00:08:02.250 --> 00:08:05.949 expenditure which they have authorized. It's 00:08:05.949 --> 00:08:07.750 a decision that Parliament cannot really take, 00:08:07.889 --> 00:08:10.589 and I think all responsible parties will cooperate 00:08:10.589 --> 00:08:13.889 to avoid that. Now the big question, will the 00:08:13.889 --> 00:08:18.589 DA leave the GNU? What's your take? As of today's 00:08:18.589 --> 00:08:22.879 date, that is uncertain. There's a lot of noise 00:08:22.879 --> 00:08:27.160 and dust. My own view is that it's not a foregone 00:08:27.160 --> 00:08:30.480 conclusion. It is true that there are two factions 00:08:30.480 --> 00:08:33.399 in ANC, but there are also two factions in the 00:08:33.399 --> 00:08:37.019 DA. And in both parties, there's a faction that 00:08:37.019 --> 00:08:40.200 wants the GNU to continue and a faction that 00:08:40.200 --> 00:08:45.340 wants the GNU to break up. Or at least only continue 00:08:45.340 --> 00:08:49.870 on their rather strenuous conditions. Will it 00:08:49.870 --> 00:08:52.809 play out that way? I honestly don't know. We'll 00:08:52.809 --> 00:08:56.409 have to see which way it goes. If they leave, 00:08:56.629 --> 00:09:00.470 the ANC would be able to form a government with 00:09:00.470 --> 00:09:05.250 about 202 votes in the National Assembly. Depending 00:09:05.250 --> 00:09:08.509 on who supports them, maybe 210 votes or 208 00:09:08.509 --> 00:09:11.230 votes rather. So it will be a very slim majority 00:09:11.230 --> 00:09:14.590 and the whips will have their hands full to make 00:09:14.590 --> 00:09:16.889 sure that every time there's a vote, all the 00:09:16.889 --> 00:09:20.059 members are there and they all vote. Who is included 00:09:20.059 --> 00:09:23.500 in that? Well, it'll be the ANC, it'll be the 00:09:23.500 --> 00:09:26.879 IFP, it'll be the Patriotic Alliance, it'll be 00:09:26.879 --> 00:09:29.840 good. The parties that have so far supported 00:09:29.840 --> 00:09:33.379 the process. But not the EFF? No, not the EFF 00:09:33.379 --> 00:09:35.679 and not the MK. I haven't included them in those 00:09:35.679 --> 00:09:38.340 numbers. Now, that's okay. You know, you can 00:09:38.340 --> 00:09:41.259 run the country if you have a majority of two 00:09:41.259 --> 00:09:43.559 or three, but it's not a comfortable position 00:09:43.559 --> 00:09:46.299 and it would, of course, be much better. If the 00:09:46.299 --> 00:09:48.080 government of national unity has got a stronger 00:09:48.080 --> 00:09:52.620 majority, if the remaining government then allows 00:09:52.620 --> 00:09:55.700 the EFF or MK in, they can have more numbers, 00:09:55.720 --> 00:09:57.379 but I'm not sure they will have more stability. 00:09:57.899 --> 00:10:02.620 So I don't think that's a good situation. So 00:10:02.620 --> 00:10:06.740 what at this point? Well, I think the first point 00:10:06.740 --> 00:10:09.379 is the approval of the fiscal framework was important. 00:10:09.740 --> 00:10:11.879 In the past, we've taken these things almost 00:10:11.879 --> 00:10:15.509 as automatic. Now democracy is asserting itself. 00:10:15.830 --> 00:10:18.169 There's no longer one party controlling parliament 00:10:18.169 --> 00:10:21.470 or having a majority in parliament. And it was 00:10:21.470 --> 00:10:25.169 kind of an experience in dealing with democratic 00:10:25.169 --> 00:10:29.070 forces, shaping the budget. So getting that fiscal 00:10:29.070 --> 00:10:30.950 framework through was an important thing. As 00:10:30.950 --> 00:10:33.509 I've said, it sets in stone three important numbers 00:10:33.509 --> 00:10:36.090 and everything else must now fit into those numbers. 00:10:36.269 --> 00:10:40.179 So that's something to be happy about. Secondly, 00:10:40.259 --> 00:10:42.419 the second so what, I think we must accept that 00:10:42.419 --> 00:10:45.080 the VAT increase will come in force on 1 May. 00:10:45.519 --> 00:10:48.820 And with that, we must accept that I do not think 00:10:48.820 --> 00:10:51.980 there's going to be a reduction in personal tax 00:10:51.980 --> 00:10:57.100 rates as proposed by Action SA. To not increase 00:10:57.100 --> 00:10:59.899 the VAT rate and to give the reduced tax rates 00:10:59.899 --> 00:11:04.649 will cost 31 billion Rand. Now, there are no 00:11:04.649 --> 00:11:06.629 money trees in the country where you can go and 00:11:06.629 --> 00:11:09.070 pluck money off. So I don't think it's possible 00:11:09.070 --> 00:11:11.009 to find that amount of money. So I don't think 00:11:11.009 --> 00:11:14.450 that income will be sacrificed. And your third, 00:11:14.529 --> 00:11:19.330 so what is a motion of commiseration for the 00:11:19.330 --> 00:11:21.990 whips for the next while? Yes, indeed. You know, 00:11:21.990 --> 00:11:26.389 those numbers that we had, 194 in favor, 182 00:11:26.389 --> 00:11:29.929 against, majority of 12, but 24 people didn't 00:11:29.929 --> 00:11:32.929 vote. That means that in the further rounds of 00:11:32.929 --> 00:11:35.090 approval, the other rounds that are still left 00:11:35.090 --> 00:11:37.730 over, which we discussed, the WIPs will have 00:11:37.730 --> 00:11:39.950 their work cut out to make sure that all the 00:11:39.950 --> 00:11:42.450 members are there all the time. Sometimes people 00:11:42.450 --> 00:11:44.590 are sick, sometimes people are on a study visit 00:11:44.590 --> 00:11:47.549 or they travel or whatever. Well, they'll have 00:11:47.549 --> 00:11:49.769 to be in the house when there's a vote. That 00:11:49.769 --> 00:11:51.870 is what the WIPs are there for, but they will 00:11:51.870 --> 00:11:54.549 have their hands full. And so it is quite possible 00:11:54.549 --> 00:11:57.669 that we see in the three further rounds of approvals, 00:11:57.769 --> 00:12:02.009 if the DA leaves the GNU, we may see in the further 00:12:02.009 --> 00:12:05.309 three rounds of approval that it's again a very 00:12:05.309 --> 00:12:09.809 damn close -run thing. That may become the hallmark 00:12:09.809 --> 00:12:13.250 of this year's budget. Turning to tariffs, first, 00:12:13.429 --> 00:12:16.710 just a summary, what has happened? Well, on the 00:12:16.710 --> 00:12:20.129 same day that we approved the budget, Trump announced 00:12:20.129 --> 00:12:23.309 what he calls Liberation Day, where he imposed 00:12:23.309 --> 00:12:26.009 tariffs on the whole world, friends and foes. 00:12:26.700 --> 00:12:30.700 A minimum tariff of 10 % on countries which did 00:12:30.700 --> 00:12:33.519 not particularly offend him. And then a higher 00:12:33.519 --> 00:12:37.039 so -called reciprocal tariff for countries with 00:12:37.039 --> 00:12:39.240 whom the US has got a current account deficit 00:12:39.240 --> 00:12:42.919 or a trade deficit. And he wants to force those 00:12:42.919 --> 00:12:46.720 countries to change the numbers. So for South 00:12:46.720 --> 00:12:50.700 Africa, he imposed a 30 % tariff of all exports 00:12:50.700 --> 00:12:53.419 from South Africa into the U .S., effectively 00:12:53.419 --> 00:12:56.200 making our products more expensive in America. 00:12:56.759 --> 00:12:58.899 Now, that cost will, of course, be carried by 00:12:58.899 --> 00:13:01.100 the American consumer. It's not carried by South 00:13:01.100 --> 00:13:04.519 Africans. But South Africans will carry the cost 00:13:04.519 --> 00:13:08.659 of fewer exports, lesser sales in the U .S. In 00:13:08.659 --> 00:13:11.000 that way, we will have a cost. But the cost of 00:13:11.000 --> 00:13:13.940 the higher products will be borne by the Americans. 00:13:14.809 --> 00:13:16.769 Now, it's quite interesting, Rita, that about 00:13:16.769 --> 00:13:19.990 50 % of our exports to the U .S. were exempt 00:13:19.990 --> 00:13:23.750 from this 30 % tariff. Why? Because it's minerals 00:13:23.750 --> 00:13:27.110 which the U .S. actually wants and need. So they've 00:13:27.110 --> 00:13:30.210 neatly carved out what is in their self -interest 00:13:30.210 --> 00:13:33.049 and said, okay, that we will not tariff. Diamonds 00:13:33.049 --> 00:13:37.309 and iron ore are taxed or are tariffed. They 00:13:37.309 --> 00:13:40.730 will carry the 30 % tariff. But then there's 00:13:40.730 --> 00:13:45.570 a whole host of articles like copper. Zinc, manganese, 00:13:45.629 --> 00:13:48.990 gold, the platinum group of metals, certain chemicals 00:13:48.990 --> 00:13:52.490 and certain wood and nickel products are exempt. 00:13:52.950 --> 00:13:55.409 As I've said, that makes up more than half of 00:13:55.409 --> 00:13:59.250 our exports to the US. So, yeah, they will not 00:13:59.250 --> 00:14:02.190 be affected. But it must be said that the sectors 00:14:02.190 --> 00:14:05.629 that will be affected very seriously is farmers, 00:14:05.809 --> 00:14:08.450 agricultural products, particularly citrus and 00:14:08.450 --> 00:14:11.620 wine and fruit juices. And very importantly, 00:14:11.799 --> 00:14:15.519 automotive exports. We've got automotive manufacturers 00:14:15.519 --> 00:14:19.840 in South Africa, BMW, Mercedes, the Ford bakkie, 00:14:19.960 --> 00:14:23.000 which is made primarily for exports to the American 00:14:23.000 --> 00:14:25.759 market. Those tariffs will hurt them very, very 00:14:25.759 --> 00:14:28.340 hard. No question. They will just not be competitive 00:14:28.340 --> 00:14:32.679 in the American market. No. Trump waved around 00:14:32.679 --> 00:14:37.240 a poster during this news conference, and it 00:14:37.240 --> 00:14:40.940 had certain... quote -unquote facts about South 00:14:40.940 --> 00:14:44.019 Africa's tariffs. Were they correct? The poster 00:14:44.019 --> 00:14:46.080 that he waved around showed that South Africa 00:14:46.080 --> 00:14:51.720 is imposing a 60 % import tariffs against American 00:14:51.720 --> 00:14:56.019 exports coming into South Africa. Now, that's, 00:14:56.019 --> 00:14:58.379 of course, completely nonsense. And there are 00:14:58.379 --> 00:15:00.620 two sources for me saying nonsense. The one is 00:15:00.620 --> 00:15:04.259 a US government agency. It is called the US Trade 00:15:04.259 --> 00:15:07.620 Administration. And on their website, it says 00:15:07.620 --> 00:15:10.480 the following. South Africa reformed and simplified 00:15:10.480 --> 00:15:14.580 its tariff structure in 1994. Tariff rates has 00:15:14.580 --> 00:15:16.919 been reduced from a simple average of more than 00:15:16.919 --> 00:15:22.340 20 % to an average of 7 .1 % in 2020. Tariff 00:15:22.340 --> 00:15:25.600 rates mostly fall within eight levels ranging 00:15:25.600 --> 00:15:30.299 between 0 % to 30%. This was written in January 00:15:30.299 --> 00:15:33.759 24 and I accessed it on the website on the 3rd 00:15:33.759 --> 00:15:35.799 of April 25. So that's what the US government 00:15:35.799 --> 00:15:40.279 agency said. mostly 0 to 30. Professor Johan 00:15:40.279 --> 00:15:43.200 Furry from Stellenbosch analyzed the trade data 00:15:43.200 --> 00:15:46.480 of trade between South Africa and the US, and 00:15:46.480 --> 00:15:48.860 he found that there are only four categories 00:15:48.860 --> 00:15:52.600 from more than 1 ,000 categories where South 00:15:52.600 --> 00:15:56.000 Africa levies more than 60 % tariffs on US goods, 00:15:56.220 --> 00:15:59.750 four out of 1 ,000. The total value of those 00:15:59.750 --> 00:16:04.750 imports came to $379 ,000, and the total imports 00:16:04.750 --> 00:16:08.529 from the U .S. were $6 billion. So you talk about 00:16:08.529 --> 00:16:12.210 .0063. So I think what happened in the White 00:16:12.210 --> 00:16:14.230 House, somebody didn't see the comma and assumed 00:16:14.230 --> 00:16:18.629 .0063 is 60%. That's the only explanation I can 00:16:18.629 --> 00:16:21.990 have for it. You know, quite frankly, the White 00:16:21.990 --> 00:16:25.250 House and Trump are as informed on tariffs as 00:16:25.250 --> 00:16:28.009 they are on the so -called land grabs. What does 00:16:28.009 --> 00:16:31.269 this mean for AGOA? I think it means AGOA has 00:16:31.269 --> 00:16:34.250 gone ruder. AGOA was supposed to expire in August 00:16:34.250 --> 00:16:37.649 25, five months' time, but these tariffs clearly 00:16:37.649 --> 00:16:40.590 overrule it. There are opinions to the contrary, 00:16:40.769 --> 00:16:43.750 but I think effectively AGOA is finished. So 00:16:43.750 --> 00:16:48.149 we can say goodbye to it. The impact? As we've 00:16:48.149 --> 00:16:50.330 discussed, the impact will be serious on the 00:16:50.330 --> 00:16:53.100 South African automotive industry. particularly 00:16:53.100 --> 00:16:55.240 those three companies that export to the US, 00:16:55.480 --> 00:16:59.399 Mercedes, BMW and Ford. It will be serious for 00:16:59.399 --> 00:17:03.399 citrus farmers countrywide, but particularly 00:17:03.399 --> 00:17:06.359 also in the Western Cape. It's serious for wine 00:17:06.359 --> 00:17:09.119 producers and serious for fruit juice people. 00:17:09.240 --> 00:17:12.279 So it will hit agriculture and it will hit automotive. 00:17:13.640 --> 00:17:18.420 The government is preparing to table a comprehensive 00:17:18.420 --> 00:17:20.700 trade and relationship agreement with the US. 00:17:21.480 --> 00:17:24.279 Do you see a future for that? I think it's a 00:17:24.279 --> 00:17:25.799 good thing that government is doing it. It's 00:17:25.799 --> 00:17:27.500 the right thing to do. It's the appropriate thing 00:17:27.500 --> 00:17:29.759 to do. I think it has a zero chance of success. 00:17:30.539 --> 00:17:34.059 Why do I say that? Because the gripes that Trump 00:17:34.059 --> 00:17:37.440 has with South Africa are of such a nature that 00:17:37.440 --> 00:17:40.180 I don't think there's room for a deal. He wants 00:17:40.180 --> 00:17:42.539 us to suspend the court case against Israel. 00:17:42.680 --> 00:17:45.099 Well, we're not going to do that. He wants us 00:17:45.099 --> 00:17:47.259 to scrap the Expropriation Act. Well, we're not 00:17:47.259 --> 00:17:49.640 going to do that. The Expropriation Act will 00:17:49.640 --> 00:17:52.119 be changed in this country by this country's 00:17:52.119 --> 00:17:54.740 constitutional court, not by pressure from Trump. 00:17:54.819 --> 00:17:57.640 And so I can go through all five of his elements 00:17:57.640 --> 00:18:01.079 or his gripes. So I would be very surprised. 00:18:01.380 --> 00:18:03.039 I don't want to be negative. I think it's the 00:18:03.039 --> 00:18:05.460 right thing to do. But I'll be very surprised 00:18:05.460 --> 00:18:08.299 if, given these gripes, we can make a deal with 00:18:08.299 --> 00:18:12.589 the U .S. So in your view, we should diversify. 00:18:12.650 --> 00:18:16.309 We should find other clients. Absolutely. There's 00:18:16.309 --> 00:18:18.869 no alternative. You know, people, the media makes 00:18:18.869 --> 00:18:20.910 a lot of the fact that America is our second 00:18:20.910 --> 00:18:24.609 biggest trading partner after China. And that's 00:18:24.609 --> 00:18:27.529 true. But it's also true that our exports to 00:18:27.529 --> 00:18:30.549 America is less than 10 % of our exports, sitting 00:18:30.549 --> 00:18:33.910 about 8 % or thereabouts. Of course, it changes 00:18:33.910 --> 00:18:38.089 from quarter to quarter. Now, 8 % is a lot. I'm 00:18:38.089 --> 00:18:40.809 not trying to minimize it, but that means you've 00:18:40.809 --> 00:18:44.230 got 92 % elsewhere. It also tells you that we 00:18:44.230 --> 00:18:46.849 have successfully, over the last 20, 30 years, 00:18:47.049 --> 00:18:50.549 diversified our exports, particularly to the 00:18:50.549 --> 00:18:54.549 East. The East takes 35 % of our exports. Europe 00:18:54.549 --> 00:19:00.660 takes 25%. Africa takes 25%. So that's 85%. 8 00:19:00.660 --> 00:19:03.779 % to 10%, 95%. The Middle East takes about 3 00:19:03.779 --> 00:19:07.400 % to 4%. And then Australasia and South America, 00:19:07.420 --> 00:19:10.099 the rest. Now, particularly in the Middle East, 00:19:10.180 --> 00:19:13.380 there is huge export potential. That doesn't 00:19:13.380 --> 00:19:15.720 mean it's easy fruit to pluck from a tree, not 00:19:15.720 --> 00:19:18.700 at all. But a country like Saudi Arabia has got 00:19:18.700 --> 00:19:22.500 something like $25 billion of agricultural exports 00:19:22.500 --> 00:19:25.720 every year. Of that, South Africa holds only 00:19:25.720 --> 00:19:29.359 about 1%. You mean that's what they import? That's 00:19:29.359 --> 00:19:31.049 what they import. That's what they import from 00:19:31.049 --> 00:19:34.549 other countries. And we only hold about 1 % of 00:19:34.549 --> 00:19:37.529 that. So there's chiaroscopy to that. China is 00:19:37.529 --> 00:19:41.650 an enormous agricultural importer. So our government, 00:19:41.910 --> 00:19:45.369 particularly DERCO, foreign affairs, agriculture, 00:19:45.849 --> 00:19:48.950 trade and industry, have got to step up our game 00:19:48.950 --> 00:19:52.230 of getting preferential trade agreements with 00:19:52.230 --> 00:19:54.730 those countries and get our agricultural products 00:19:54.730 --> 00:19:59.839 into their markets. In summary, so what? I think 00:19:59.839 --> 00:20:01.900 the biggest so what is that Trump has essentially 00:20:01.900 --> 00:20:06.299 launched a trade war against virtually the whole 00:20:06.299 --> 00:20:10.319 world, friend and foe. People that have been 00:20:10.319 --> 00:20:13.000 loyal friends of America and people who've been 00:20:13.000 --> 00:20:15.539 loyal enemies of America. Everybody got a club. 00:20:16.259 --> 00:20:19.099 And we will have to see how that affects international 00:20:19.099 --> 00:20:21.279 relations, but it can't be good for America. 00:20:22.119 --> 00:20:26.259 The 30 % reciprocal tariff levied on South Africa 00:20:26.259 --> 00:20:29.529 will hit our growth rate. Up till now, we've 00:20:29.529 --> 00:20:31.390 been working with a potential growth rate of 00:20:31.390 --> 00:20:34.869 1 .8 % for 2025. That growth rate, I think, will 00:20:34.869 --> 00:20:38.289 come down. We will have to see by how much the 00:20:38.289 --> 00:20:40.410 different economists and research houses will 00:20:40.410 --> 00:20:42.849 tell us over the next weeks as they run their 00:20:42.849 --> 00:20:45.430 models. But essentially, our population growth 00:20:45.430 --> 00:20:48.069 is 1 .3%, so you don't want to have economic 00:20:48.069 --> 00:20:50.769 growth lower than that. You want to have it at 00:20:50.769 --> 00:20:53.440 a higher number. Our labor force is expanding 00:20:53.440 --> 00:20:56.579 at 1 .4%, so again, you want a growth rate higher 00:20:56.579 --> 00:20:58.759 than that. We'll have to see whether that can 00:20:58.759 --> 00:21:02.240 be achieved. The third so what is, I think the 00:21:02.240 --> 00:21:04.539 prospects of a deal with the United States or 00:21:04.539 --> 00:21:07.119 with the Trump government is very low. As I've 00:21:07.119 --> 00:21:09.299 said, the gripes that he has are gripes that 00:21:09.299 --> 00:21:12.480 we can't do much about, and that is going to 00:21:12.480 --> 00:21:14.420 preclude a deal. Unless, you know, the man is 00:21:14.420 --> 00:21:17.099 very volatile and transactional, maybe we do 00:21:17.099 --> 00:21:19.339 get a deal, and then nobody will be more happy 00:21:19.339 --> 00:21:21.950 than me. But I think we must be realistic about 00:21:21.950 --> 00:21:24.650 the chances. And in the meantime, we must work 00:21:24.650 --> 00:21:27.589 really hard to diversify our export markets. 00:21:27.769 --> 00:21:30.990 Absolutely. That is where people must now focus. 00:21:32.170 --> 00:21:34.630 Thank you very much. I hope we don't have to 00:21:34.630 --> 00:21:37.170 come back to a microphone in the next week. You 00:21:37.170 --> 00:21:39.470 know, it's a Chinese curse that you live in interesting 00:21:39.470 --> 00:21:44.119 times. Indeed. Thank you for listening to the 00:21:44.119 --> 00:21:47.440 So What Podcast. 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