Tariffs and trade wars: 2025

Tariffs are taxes imposed by governments on imported goods. This tax increases the product’s price, often making imports less competitive than domestic goods. Governments use tariffs to protect local industries, raise revenue and influence trade relations.

Tariffs can contribute to inflation by making imported goods more expensive. When businesses that import goods face higher costs due to tariffs, they often pass these costs on to consumers through higher prices. However, the overall inflationary effect depends on how widely tariffs are applied and how much the economy relies on imports.

Most economist agree that tariffs can contribute to a recession if they significantly disrupt trade, raise costs for businesses, and reduce consumer spending. Widespread tariffs can lead to retaliatory measures, which can then shrink exports and harm key industries. However, tariffs alone rarely cause recessions; broader economic factors and policy responses also play major roles.

The cost of a tariff is generally passed to the consumer, as businesses facing higher import costs usually pass these costs on through higher prices. In some cases, importers or producers absorb part of the cost, reducing their profit margins. The exact impact depends on market conditions, demand and competition within affected industries.

Trade wars disrupt the global economy by raising barriers to trade, increasing costs for businesses and consumers, and creating uncertainty in markets. They can slow economic growth, shift supply chains and lead to retaliation, which affects jobs and investment worldwide. The overall impact depends on the scale and duration of the conflict.

Tariffs can protect specific industries or generate government revenue, but may also raise consumer prices and invite retaliation. Their overall effectiveness varies by country, sector and circumstances. Economists debate their long-term impact on economic growth, efficiency and international relations, with no universal consensus.

South Africa imports a variety of goods from the US, including machinery, vehicles, aircraft, agricultural products (like wheat and soybeans), pharmaceuticals, medical equipment and chemicals. These imports support key sectors such as mining, manufacturing, and healthcare.

Services such as American information technology – including software, cloud solutions and tech platforms – are also a key component of U.S.–South Africa trade and are widely used by South African consumers, businesses and institutions.