By mid-morning, the local currency was trading at R18.88, from R18.52 a day ago. Apart from steep new tariffs on US exports, the market is also concerned about the DA’s exit from the business-friendly government of national unity (GNU).
The ANC’s main governing partner, the DA, voted against key Budget legislation. President Cyril Ramaphosa and Finance Minister Enoch Godongwana both said the party should now leave the GNU.
The ANC refused to comply with the DA’s demands for a larger say in economic decision making.
The JSE’s All Share index dropped almost 3%, with Sasol (which has a large chemicals facility in the US), MTN, Discovery and Capitec all losing more than 5%.
Across the world, markets tumbled amid concerns that a global trade war will spark recessions and ramp up inflation.
Tokyo’s Nikkei led Asia’s selloff, briefly collapsing more than 4%, while US futures plunged with oil prices, safe haven gold hit a record high and the yen jumped 1% amid worries retaliatory measures will deepen the crisis.
The panic came after the US president on his so-called “Liberation Day” unveiled a blitz of harsher-than-expected levies aimed at correcting trade deficits following what he says has been years of the United States being “ripped off”.
Against a White House backdrop of US flags, Trump announced that “for decades, our country has been looted, pillaged, raped and plundered by nations near and far, both friend and foe alike”.
Trump reserved some of the heaviest blows for what he called the “nations that treat us badly.”
This included South African producers, which will face 31% tariffs on their US exports. However, more than half of SA exports to the US are mining commodities – much of which have been exempted from the new tariffs.
The US also announced 34% in new levies on rival China, 20% on key ally the European Union and 24% on Japan.
These countries will face specifically tailored tariff levels, and for the rest, Trump said he would impose a “baseline” tariff of 10%. Auto tariffs of 25% kicked in on Thursday.
Investors are now steeling themselves for retaliatory measures, with governments making their anger clear.
China vowed “countermeasures” and urged Washington to cancel the tariffs, while calling for dialogue. Japan said the move was “extremely regrettable” and could contravene World Trade Organisation rules, while Taiwan described the levies as “highly unreasonable”.
European Union chief Ursula von der Leyen called Trump’s announcement a “major blow to the world economy” but vowed the bloc was “prepared to respond”.
And France said Brussels was “ready for a trade war” and plans to target online services in response.
Thailand said it had a “strong plan” to handle the new US measures and hopes to negotiate a reduction, while Canadian Prime Minister Mark Carney warned “we are going to fight these tariffs with counter measures”.
“We are going to protect our workers,” Carney said.
‘Shock and awe’
Stephen Innes of SPI Asset Management said: “President Trump walked into the Rose Garden and detonated the most aggressive trade shock the market’s seen in decades. This isn’t a jab – it’s a full-on haymaker.”
Wall Street “had talked itself into a softer, more symbolic move. Instead, Trump carpet-bombed the global supply chain”.
“This was a ‘shock and awe’ tariffs campaign, dressed up in ‘reciprocity’ language but designed to throttle the trade deficit through brute force.”
He said the measures meant that inflation risks had surged and economic growth expectations would be cut, with the US Federal Reserve “pinned between a hawkish rock and a deflationary hard place”.
Tokyo pared its hefty drop slightly but still ended down 2.8%, while Hong Kong, Sydney, Seoul, Manila, Mumbai, Shanghai and Singapore also fell. However, Wellington managed to eke out a small gain as New Zealand faced smaller tariffs.
At the open in Europe, London tumbled more than 1%, while Frankfurt and Paris shed more than 2%.
Vietnam’s stock exchange dived more than 7% after the country was hit with levies of almost 50%.
Wall Street futures were also battered, with the Dow dropping 2%, the Nasdaq plunging more than 3% and the S&P 500 2.8% off.
Safe havens rallied as traders sought to dump risk assets.
Gold hit a new peak of $3,167.84 and the Japanese yen strengthened to 147.04 per dollar from 150.50 the day before.
Among other currencies, bets that the Fed will have to cut interest rates to deal with the impact on the US economy weighed on the dollar, with the euro and pound both jumping more than 1%.
US Treasury yields sank to their lowest level in five months — yields and prices go in opposite directions.
Oil also suffered big losses, with both main contracts down more than 2% on fears that the shock to economies would hit demand.
Among the big losers on the corporate front, Japanese tech giant Sony shed 4.8%, while its South Korean rival Samsung was down 2%.
Car titan Toyota was off more than 5%, Nissan lost 3.7% and Honda was down 2.3%. Tokyo-listed tech investment firm SoftBank was off close to 4%.
And Hong Kong-listed e-commerce giants fell after Trump’s removal of a duty-free exemption for small parcels from China. Sector leaders Alibaba and JD.com shed around 5%.
Tai Hui of JP Morgan Asset Management said the scale of the measures raised concerns about growth.
“US consumers may cut back on spending due to pricier imports, and businesses might delay capital expenditures amid uncertainty about the tariffs’ full impact and potential retaliation from trade partners,” he wrote in a note.
