Proposed US tariffs present both direct and indirect risks for South African companies, forcing CFOs to reassess demand exposure, transfer pricing and long-term capital investment strategies.
On 8 August 2025, a tariff of 30 percent on South African exports to the US kicked in. South African officials say the US tariff could cause tens of thousands of job losses, especially in the agriculture and automobile manufacturing industries.
The proposed US tariffs could impact South African companies, whether they sell directly into the US or not. For example, a company exporting to the US may find its products becoming uncompetitive due to increased landed costs, leading to a drop in demand. Indirectly, companies could face pricing pressures as global competitors redirect surplus inventory into secondary markets, including South Africa.
CFOs should work with their boards to assess exposure, both direct and indirect, and consider scenario planning for demand shifts, margin compression and market reallocation strategies.
For exporting firms, the immediate concern lies in demand shocks. Higher landed costs could deter US buyers, resulting in reduced order volumes and delayed receivables. At the same time, cash flow could be pressured if the South African exporter chooses to bear the duty directly. Strategic pricing decisions will therefore be central. Maintaining current pricing may preserve margins but risks lowering sales volumes and delaying revenue. Absorbing tariffs might protect US market share but would erode profitability, and in cases where sales are to related parties, lower prices must be defensible under transfer pricing rules to avoid scrutiny from Sars.
Some companies may choose to diversify into new markets, but this comes with upfront costs to establish distribution channels and brand awareness. Others may reduce production if demand falls, a step that could have significant knock-on effects for profitability, tax collections and employment. Each of these options carries distinct financial and operational consequences, and careful evaluation will be required.
Impact of US imposed tariffs
When considering capital investment decisions, tariff shocks should not become the sole determinant. Since 2020, businesses have had to contend with a series of global disruptions, from pandemics to shipping crises and energy shortages. These events have underscored the need for agility and robust scenario planning.
Rather than reacting to each policy change, CFOs should embed resilience into their supply chain and capital allocation models. New investments should be stress-tested across a range of disruption scenarios, ensuring that companies are prepared not only for tariff volatility but for broader global shocks.
Transfer pricing, too, must be viewed as more than a compliance requirement. It is increasingly a strategic tool that shapes business resilience. A well-structured transfer pricing model ensures fair compensation across group entities and reduces the risk of double taxation.
Conducting value chain analysis allows businesses to assess how profits are distributed and whether these allocations reflect commercial substance. In practice, what may appear to be misaligned in the short term can be explained by longer-term risk and reward patterns. This makes context crucial in designing pricing structures that are both defensible and strategically sound.
Collaboration with tax and legal teams is essential to avoid transfer pricing structures that could attract penalties or disallowances. Risks often emerge not from the rules themselves, but from poor implementation or ad hoc commercial decisions. Ensuring that all cross-border transactions are assessed for tax implications before execution, that policies reflect commercial realities, and that supporting documentation clearly demonstrates both pricing and business rationale can significantly reduce exposure. Given the increasingly aggressive stance of tax authorities in multiple jurisdictions, proactive compliance is far less costly than retroactive defence.
Restructuring-related costs also require careful allocation. Whether involving severance, retooling, or legal fees, CFOs need to establish why the costs are being incurred and who stands to benefit. In some cases, it may be appropriate for group headquarters to absorb the expense if the restructuring reflects a broader strategic shift. Where the benefits are localised, however, local entities may be required to shoulder the cost.
This distinction becomes even more critical in M&A contexts, where acquirers often scrutinise transfer pricing structures and may discount the purchase price if flaws are identified. Sound transfer pricing, therefore, not only safeguards tax positions but also protects shareholder value.
Tariffs may further compound pressures in capital-intensive industries such as auto manufacturing and agri-processing. These sectors rely heavily on global supply chains and demand consistency and precision from local operations. Higher tariffs could incentivise multinationals to relocate production from South Africa to jurisdictions with more favourable trade environments. The risks extend beyond the loss of current production contracts, potentially resulting in missed opportunities for future investment. Even if tariffs are later reversed, production lines are not easily relocated and prolonged uncertainty may damage South Africa’s reputation as a manufacturing hub.
Avoiding global impacts
To mitigate broader economic impacts, CFOs cannot act in isolation. Tariffs have consequences beyond corporate profitability, affecting jobs, tax revenues, and national competitiveness.
Engaging with industry bodies, collaborating with government stakeholders and presenting data-driven scenarios of how tariffs affect employment and fiscal contributions will be crucial in shaping balanced policy outcomes. Unified advocacy, built on evidence and collaboration, can ensure that South Africa’s position in global trade is protected.
Ultimately, the most important mindset shift CFOs must embrace is one of action. Shocks are inevitable, and resilience does not come from predicting them but from being prepared to respond decisively. The lessons of recent years have shown that in every crisis lies opportunity.
Many of the companies thriving in 2025 are those that reimagined their business models during the pandemic, with South African retailers transforming home delivery from a luxury into a mainstream service in a matter of months. For CFOs navigating tariff uncertainty, the same principle applies: success will come not from resisting disruption, but from turning it into a catalyst for strategic renewal.
