SA’s ICT distributors call for caution amid US tariffs roller-coaster

South Africa-based ICT distributors are closely watching developments in the US regarding tariffs, and say it’s too early to determine how this will impact their businesses and local consumers.

This, as global markets are facing heightened volatility due to economic warfare, inflation and shifting trade policies.

US president Donald Trump introduced the concept of reciprocal tariffs as part of his broader “America First” trade policy, arguing that the US should impose the same tariffs on countries that levy high tariffs on American goods.

The Trump administration slapped South Africa with a 30% export tariff hike earlier this month. However, in a turn of events, this week Trump announced a 90-day pause on increased tariffs for most US trading partners, including South Africa, aiming to ease global economic tensions and stabilise financial markets.

This decision came after significant market volatility and mounting pressure from business leaders and political figures.

While the pause offers temporary relief, it excludes China, which now faces a heightened tariff rate of 125% on its exports to the US.

The Trump administration stated that the 90-day period would be used to negotiate individualised trade agreements with various countries.

Amid the tariff storm, the local IT distributors are urging the South African government to take a measured approach in its response to the taxes.

The Presidency has said that while South Africa remains committed to a mutually-beneficial trade relationship with the US, “unilaterally imposed and punitive tariffs are a concern and serve as a barrier to trade and shared prosperity”.

According to the Presidency, the increased tariffs affirm the urgency to negotiate a new bilateral and mutually-beneficial trade agreement with the US, as an essential step to secure long-term trade certainty.

“At this stage, it’s too early to determine the full impact of the tariffs on South Africa,” comments Graham Duxbury, CEO of Duxbury Networking, a solutions-focused distribution organisation with branches in Johannesburg, Durban and Cape Town.

“While the initial announcement caused concern, the US government has since paused the implementation of the tariffs. The situation remains fluid, and we are monitoring developments closely,” he notes.

“In general, we really think it’s too early to tell and we are watching the situation closely. You may have seen that the US has announced a 90-day pause to the tariffs higher than 10%,” says Craig Brunsden, CEO of Axiz, a digital technologies and services distributor.

“On the plus, although we expect a big impact on IT goods, these tariffs apply to the importer based on the origin country. Much of the goods are manufactured outside the US, and unless SA’s government imposes tariffs on the exporting country, it may not be a big factor for the South African IT sector, as most of our goods are imported. It may affect those SA-based companies exporting tech to the US, but those are the minority in the SA IT channel we work with.”

Brunsden believes the biggest impact is on the rand, and this volatility is really difficult to manage or plan around. The net effect will be a sudden jump in prices, and channel margins cannot absorb such big shocks.

All this uncertainly can create panic purchasing or oversupply in some cases, so all in all, the effects will not be positive, says Brunsden.

“I read an analyst report earlier today that shows the US PC market bounced up considerably in Q3, lifting the world market up 9% due to stockpiling in the US before the announcement of tariffs,” he adds.

“This in itself can imbalance the world markets, as supply is diverted to the US from other smaller markets, and we suspect this is already affecting us, as major PC brand vendors have very limited funds to support South African customers with special deals.

“This is the kind of secondary impact I’m referring to. It’s impossible to work it out now, but in due course, it is likely to create supply disruptions and higher prices for emerging markets like Africa.”

Duxbury points out that should the tariffs proceed in future, the impact would depend on the final list of affected products and the specific terms applied to South African imports. Until there is more clarity, he says, it’s difficult to say which product categories might be most affected.

“If tariffs are implemented down the line, there could be a knock-on effect on pricing or availability depending on the product and supply chain exposure. But for now, there’s no immediate change expected.

“We are following the situation closely and engaging with our international suppliers to understand any potential implications. No immediate action is required while the tariffs remain on hold, but we are prepared to respond if needed,” Duxbury says.

On how the South African government must respond to the US tariffs, Brunsden says: “I am no political expert and the South African situation is extremely complex, but our competitive stance against US foreign policy is not good for trade with the US, which will really hurt labour-intensive industries.

“I would urge the government to really consider whether our supposed moral position on world affairs is worth the damage it could do to our local economy by being on the wrong side of one of the largest trading partners.

“I’d urge our government to take a firmer position on state wasteful expenditure and prosecute offenders named in the Zondo Commission, rather than pick fights with giants.”

Duxbury urges: “We would encourage continued diplomatic engagement with the US and a measured approach. It’s important to gather all the facts before reacting, given the temporary pause and the uncertainty around the final policy direction.

“In the current environment, speculation is not helpful. Our view is that it’s best to avoid knee-jerk reactions until the US government’s position is finalised. At this point, there are simply too many unknowns and the US administration is not being consistent in its approach.”