Global Talks & Budget Speech: Impact on SA Consumers

The world watched closely as President Cyril Ramaphosa met with US President Donald Trump in The White House on Wednesday, May 21, 2025. This meeting was a crucial step for South Africa, aimed at securing the future of vital trade agreements such as the African Growth and Opportunity Act (AGOA). AGOA allows preferential market access to the US for many South African products, and has a massive impact on the livelihoods and affordability of SA consumers.

The link between the Trump administration and South Africa’s economy creates uncertainties around the stability of our trade relationship with the US. This can lead to knock-on effects that will hit close to home. Fortunately, thanks to the National Credit Act for consumers, Debt Counselling is available to over-indebted individuals.

Higher Tariffs Looming

The United States is South Africa’s second-biggest trading partner. As of April 2, 2025, a 30% tariff was imposed on all SA goods entering the US, under Trump’s currently suspended set of import taxes. As a country, we export a significant amount of goods to the US, particularly vehicles and agricultural products. So, what can we expect? More expensive and less competitive exports could lead to a drop in sales, job loss, reduced local production, and, ultimately, slower economic growth for South Africa.

Unfortunately, the meeting did not result in the removal of the proposed 30% tariffs, which are set to take effect in July 2025. The AGOA, which gives South Africa duty-free access to U.S. markets, expires in September 2025. If not renewed, this could hit local exporters even harder. We will keep you updated, as Ramaphosa, Trump vow to keep talking after tense White House meeting. Let’s also take a look at the Third Budget Speech that took place in Cape Town on the same day as President Ramaphosa’s meeting in Washington.

Third Budget Speech Highlights

As covered in VAT hike reversed: what it means for you wallet, it was confirmed that VAT will stay at 15%. Sadly, after a 3-year freeze, the Finance Minister announced that there will be an inflation-based increase to fuel tax, meaning you need to budget for more costs towards petrol from 4 June 2025. The personal income tax brackets were not adjusted for inflation — a move aimed at helping offset the loss in VAT revenue. But what does that mean for you? It means that the tax creep caused by inflation will start eating away at your take-home pay. If you earn a regular salary and can’t restructure your package, you’re likely to feel it the most.

What You Can Do Now

The risk of a reduction in foreign earnings can weaken the rand, resulting in price hikes on imported goods like petrol and food. If you are on a tight budget and cannot manage your debts, now might be a good time to consider the Debt Review process. Getting started early means you can stop struggling financially and start planning for the future.

With the South African and United States relations as they are, no one knows what lies ahead. Changes to your spending habits can benefit you now and down the line. We recommend budgeting with the 50-30-20 rule to control your finances more effectively. Cut unnecessary expenses while also trying to avoid new debt if possible.

Keep an eye on South Africa’s interest rates. If inflation goes up, the Reserve Bank may raise rates, increasing the cost of credit. Rising interest rates can impact your savings, investments, and the amount you spend each month on debt.

Debt relief is possible: claim your free proposal with help from Debtco Group.