TY  - RPRT
        AU  - Rossouw, Riaan
AU  - Cameron, Martin
AU  - Naudé, Wim
        TI  - Beyond Retaliation:  South Africa Can Effectively Counter Trump's Trade Shocks
        PY  - 2026/Feb/
        PB  - Institute of Labor Economics (IZA)
        CY  - Bonn
        T2  - IZA Discussion Paper
        IS  - 18391
        UR  - https://www.iza.org/index.php/publications/dp18391
        AB  - How should a developing country such as South Africa respond to the USA's "Liberation Day" Tariffs of April 2025 and subsequent shocks? Combining the GTAP-Dynamic (GDyn) Computable General Equilibrium model with an expanded Decision Support Model (DSM), we simulate five policy response scenarios over the period 2017–2030. Our results demonstrate that a passive response to US protectionism is the least attractive option. However, a comprehensive policy mix comprising expansionary monetary policy (to induce exchange rate depreciation), unilateral tariff reduction (to lower input costs), and targeted export promotion (to diversify exports) can take South Africa’s real GDP growth back to rates last seen during 2004 to 2007 (at around 5.51% in compound annualized growth (CAGR) terms) by 2030, resulting in a surge in unskilled employment through an investment-led boom in sectors like construction and metals of around 9.8% CAGR by 2030. The results confirm that, following this path, South Africa can effectively counter Trump's trade shocks.
        KW  - trade
KW  - exports
KW  - monetary policy
KW  - trade policy
KW  - CGE modelling
KW  - GTAP
KW  - South Africa
        ER  -