FMF Policy Agenda
Summary
The paper dissects the flawed logic of tariffs, which pursue incompatible goals: tax revenue, local industry protection, or geopolitical leverage. These objectives distort markets, hinder productivity, and encourage rent-seeking, with no single tariff policy achieving all aims effectively.
Instead, free trade offers transformative benefits: lower prices, enhanced productivity, increased foreign investment, and job creation.
South Africa must diversify trade partnerships, leveraging the African Continental Free Trade Area (AfCFTA) and BRICS, while avoiding state-managed trade deals that often fail to deliver. To counter U.S. tariffs and domestic stagnation, the paper proposes bold reforms: repealing post-2019 tariffs, instituting a five-year sunset clause on existing tariffs, abolishing the International Trade Administration Commission, streamlining customs, and liberalising capital controls. It also advocates enshrining trade openness as a constitutional principle.
By embracing unilateral liberalisation, South Africa can mitigate foreign protectionism, boost competitiveness, and position itself as a regional trade hub. Rejecting retaliatory tariffs, South Africa must prioritise open markets to reclaim economic dynamism, trusting in trade as a driver of peace, cooperation, and shared prosperity. As Bastiat cautioned: “When goods do not cross borders, soldiers will.”
Contributors
