TWN Info Service on WTO and Trade Issues (Aug25/11)
15 August 2025
Third World Network

Generous offers to resolve unilateral reciprocal tariffs may yield little relief

Geneva, 14 August (D. Ravi Kanth): While developing and least-developed countries continue to suffer under the economic strain of what many describe as predatory tariffs imposed by the Trump administration, attempts to de-escalate tensions through trade overtures — such as South Africa’s reported “generous” trade proposal on 12 August — may not yield immediate resolution, according to sources familiar with the developments.

Under what critics have likened to imperial-era trade preferences used by colonial powers in the 19th century, US President Donald Trump has imposed steep tariffs on key trading partners: 30% on all South African goods entering the US market; 25% on Indian exports, set to rise to 50%; and 50% on Brazilian goods.

The rationale behind these measures is ostensibly rooted in the so-called Fair and Reciprocal Plan (FRP) — a policy framework selectively blended with politically motivated considerations, analysts say.

Troublingly, the reciprocal tariffs under the FRP appear to violate the United States’ obligations under Article I of GATT 1948 and Article II of the World Trade Organization (WTO) agreements, which enshrine the principle of non-discrimination and binding tariff commitments, former South African Trade Minister Rob Davies told this correspondent. (See Davies’s full remarks below.)

South Africa: Tariffs linked to ICJ case against Israel

In South Africa’s case, the 30% tariff is reportedly justified by two arbitrary factors: a 10% levy under the FRP, and an additional 20% attributed to Pretoria’s historic case against Israel at the International Court of Justice (ICJ) in The Hague. That case alleges that Israel is committing genocide against Palestinians in Gaza, an occupied territory, according to sources familiar with the matter.

On Tuesday, 12 August, RT (Russia Today) reported that South Africa’s Department of Trade, Industry and Competition (DTIC) and Department of Agriculture had signalled plans to submit a “generous” revised trade offer to the United States in response to the unilateral 30% tariff.

South African Trade Minister Parks Tau and Agriculture Minister John Steenhuisen confirmed that the Cabinet had approved the revised proposal, which was scheduled for submission on 18 August, as part of a five-point strategy to counter the US measures. A high-level negotiating team — including representatives from the presidency and both departments — has been assembled, the ministers said.

Without disclosing specifics, Steenhuisen described the offer as “broad, generous, and open,” adding: “I think, if one were to look at it from a trade and tariff perspective, this offer represents something that would be good for the United States and also good for South Africa.”

He emphasized the need to navigate current challenges pragmatically: “We have to navigate the seas that are in front of us, and this is perhaps a new way that things are going to go forward. I think we must do what we can to improve relations with the US and retain access to their markets.”

Steenhuisen also stressed diversification: “We must make sure we don’t put all our eggs in one basket and we look for other markets like China, Japan, the Middle East and so on. These are huge opportunities that remain untapped for us as South Africa. Perhaps this crossroads we are at now, with this tariff situation, is more of an incentive to move more determinedly toward securing these new markets for South Africa’s goods.”

Tau echoed this sentiment, noting that the entire Cabinet is involved in a national effort to diversify trade: “Part of our reality is that we have to invoke all members of the national executive to be part of the pool of people, and we would be able to provide the necessary support behind that pool.”

He highlighted ongoing efforts under the African Continental Free Trade Area (AfCFTA): “We are committed to strengthening our relationships, particularly under the AfCFTA, to build regional resilience.”

He added: “We will also continue the work we have started with our European partners toward enhancing our trade and investment relations in a manner that unlocks sustainable growth and development and entrenches South Africa in new supply chains.”

South Africa’s five-pronged response includes: securing a deal to reduce tariffs; seeking alternative markets; implementing an economic support package for vulnerable firms and workers; establishing trade defence mechanisms against import surges and dumping; and leveraging domestic demand — by consumers, the private sector, and government — as a countermeasure.

India case

For India, the Trump administration’s planned 50% tariff comprises 25% due to India’s alleged refusal to grant sweeping market access to US agricultural products, and another 25% linked to New Delhi’s continued purchases of discounted Russian oil, which Washington claims support Moscow’s war in Ukraine, according to media reports.

Despite the looming threat, India appears willing to negotiate a settlement.

In a signed article published in The New Indian Express on 13 August, former Indian trade envoy to the WTO K.M. Chandrasekhar urged India to pursue free trade agreements with the European Union, New Zealand, and other partners to offset the impact of US tariffs.

Brazil: Political retaliation alleged behind 50% tariff

Even more contentious is the case of Brazil, a country that runs a trade deficit with the US, contrary to the FRP’s logic, which targets nations with trade surpluses.

Nonetheless, the US has imposed a 50% tariff on Brazilian goods — comprising 10% under the flawed FRP calculation and 40% allegedly due to political retaliation against Brazil’s current government and Supreme Court for pursuing criminal charges against former President Jair Bolsonaro, a close ally of Trump, media reports indicate.

On Thursday, 14 August, Trump made a series of unsubstantiated claims at the White House justifying the tariffs. “They charge us tremendous tariffs, far, far more than we were charging them,” the US president said.

He said, “We weren't charging anything, essentially, and Brazil has some very bad laws happening, where they took a president and they put him in jail, or they're trying to jail him.”

Boasting of his personal relationship with Bolsonaro, Trump said: “I happen to know the man, and I will tell you, I'm pretty good at people. I think he's an honest man. I think what they've done — this is an electric... This is really a political execution that they're trying to do for Bolsonaro.”

He continued that “Brazil treated the US very badly as trading partners for many, many years — one of the worst, one of the worst countries on Earth for that. They charged tremendous tariffs and made it very difficult to do anything. So now they're being charged 50% tariffs and they're not happy, but that's the way it goes.”

To date, Brazil remains the only country refusing to engage with the Trump administration over the tariff dispute.

Canada: Tariff includes penalty for recognizing Palestine

Among industrialized nations, Canada — America’s largest export market — faces a 35% tariff: 25% under the FRP and an additional 10% reportedly due to Ottawa’s recognition of Palestine as an independent state, according to media reports.

China: Tariff deadline extended

China, the first country to retaliate against the FRP tariffs and ongoing US trade actions, has seen the Trump administration extend the deadline for imposing additional tariffs by 90 days.

South needs new trade narrative, says Rob Davies

In an interview with this correspondent on 13 August, former South African Trade Minister Rob Davies warned against rushing into free trade agreements with the EU and other developed economies, which he said are increasingly closing their markets to developing countries through mechanisms like the Carbon Border Adjustment Mechanism (CBAM) and deforestation regulations.

“So, I think that we need a different pattern of economic cooperation,” Davies said. “We don't need to be going into these issues of conformity of things that are so-called trade-related.”

He stressed that the Global South must prioritize value addition before exporting raw materials. “We need measures in place which will support the movement into value addition… We must lead trade policy rather than follow a trade-liberalized, open-ended industrial policy which doesn't work.”

When asked whether the BRICS grouping (now comprising 11 members) could realistically counter US dominance in global trade, Davies affirmed its potential — but emphasized the need for strategic direction. “BRICS is an important grouping and it needs to be moving, not in an un-strategic way, but strategically in the direction I think of beginning to craft a new robust narrative.”

He noted that while BRICS has laid out a promising agenda, much of it remains under-implemented at the necessary scale. “The kind of agenda that BRICS has laid out for itself is a very, very important set of initiatives.”

Davies observed, “I think it's for that reason, but as we move into a more multipolar world order, I think it's very important that our voices, along with those of other parts of the Global South and the least-developed and poorer countries, are part of shaping a new network.”

He expressed confidence that BRICS could offer a systemic alternative to existing international economic structures — provided it serves the interests of developing economies.

“BRICS is now, as the original members, with a sense now that BRICS represents, say, a threat [to the status quo],” Davies said, “in this multipolar world order that we talk about going towards, but we’re not there yet.”

Responding to US Trade Representative Jamieson Greer’s recent claim of a “Trump Round” and the endorsement of plurilateral deals — echoing former USTR Michael Froman — Davies questioned the wisdom of pursuing another wave of free trade agreements among Global South nations.

“The idea that trade liberalization is the solution to all problems, and that every kind of agreement, just like trade liberalization is its main content, I think is wrong. I wouldn't be rushing to have a set of free trade agreements with everyone in the Global South, [as if] this is some kind of alternative to the lack of trade agreements that we have with the United States.”

On revitalizing BRICS, he advocated for deeper regional integration. He said, “It should actually take advantage of a larger regional market because, as a collective, it is for us to have a deeper and more inclusive industrialization than is possible in India [alone].”

“So I don't want to make domestic markets available to everybody who's now scrambling for model partners.”

Davies underscored the need to rebuild the international economy around value-added capacity, particularly in the Global South.

“We also then start to work together to deploy policy tools… following the example of a country like Indonesia, and saying that if you want access to our raw materials, our critical minerals needed in the transition to the green economy, you must add value here.”

He criticized trade rules based on outdated notions of “free trade” that stifle development. “These rules are certainly challenged and struck down by concepts which are now, I think, being jettisoned all over the place.”

Davies called for a shift away from the post–World War II liberalization model.

Referencing the AfCFTA, he proposed a new paradigm: “When we start talking to parties outside, we need to say: the way you benefit from the continental free trade area is through investment-led trade. You come and establish a plant, qualify under the rules of origin — which apply to commercial activity, not ownership — and then you benefit in that way while helping develop the continent’s industrial capacity.”

In conclusion, Davies urged solidarity among developing nations. “We need to act to defend each other — those who are using policy tools to support a rise in value addition in the Global South. We need to support each other and defend each other if these are challenged.”