Global financial markets reeled this week following U.S. President Donald Trump’s sweeping “Liberation Day” tariff announcement, which imposed border taxes ranging from 10% to 50% on nearly all imports. The move, unveiled on Wednesday, sent shockwaves through global exchanges, wiping more than $2.5 trillion off equity markets worldwide by Thursday.
The S&P 500 led the decline, dropping 10.52% over two days, its steepest two-day fall since the onset of the COVID-19 pandemic. The benchmark index closed the week down 8.4%, extending its year-to-date loss to 14.3%.
Households and Markets Grow Wary
Although President Trump touted the tariffs as part of his “Make US Better” policy to boost domestic industry, concerns are mounting among U.S. households over inflation and rising unemployment. These fears were underscored by March’s non-farm payroll report, which revealed a surprising increase in unemployment from 4.1% to 4.2%, despite the addition of 228,000 new jobs—well above the forecast of 135,000.
According to Professor Niven Winchester of Auckland University of Technology, the tariffs are expected to cut U.S. GDP by $438.4 billion (1.45%), equating to a loss of $3,487 per household annually—the largest impact of any affected country.
South Africa Hard Hit as AGOA Scrapped
On April 3, Trump announced a 31% tariff on all imports from South Africa, effectively dismantling the African Growth and Opportunity Act (AGOA) privileges. Previously, South African exports—particularly in agriculture and automotive manufacturing—benefited from duty-free access to U.S. markets.
The South African Rand depreciated sharply, dropping over 100 cents in the ten days prior to the announcement, and was trading at R19.09 to the dollar on April 4. Analysts predict further weakening, alongside a likely rise in inflation toward the Reserve Bank’s midpoint target of 4.5%.
The Johannesburg Stock Exchange (JSE) also took a hit. The All Share Index (ALSI) plunged by 8,496 points, a 9.42% drop, nearly wiping out its year-to-date gains and fueling expectations of broader global market declines.
Stagflation Fears Resurface
As trade flows are disrupted, economists warn that a prolonged tariff war could lead to global stagflation—a toxic mix of slowing economic growth and rising inflation. With market volatility intensifying, investors are bracing for a protracted period of uncertainty.
Despite the turbulence, South African vehicle sales offered a rare bright spot. In March 2025, new car sales rose by 12.5% year-on-year to 49,493 units, while exports surged by 31.1%, reaching 39,477 units. However, the automotive sector is expected to come under strain in the coming months as new tariffs take effect.
Data Watch: Manufacturing and U.S. Inflation in Focus
Domestically, attention now turns to South Africa’s February manufacturing production data, due Wednesday, with expectations of a 1.0% annual decline, a modest improvement from the 3.3% drop in January.
Globally, investors are awaiting the release of the U.S. Federal Reserve’s March FOMC minutes, alongside the latest Consumer Price Index (CPI) figures. Analysts forecast a slight cooling, with core CPI expected at 3%, down from 3.1% in February.