For many decades, tariffs have been among the most contested instruments of economic policy, from the post-war industrialisation strategies of East Asia to the neoliberal free trade regimes imposed through the World Trade Organisation (WTO). The question of whether developing countries should protect their industries or adopt unrestricted free trade agreements is critical to debates about economic development.
In South Africa, this debate is crucial. The country is confronted with crises of deindustrialisation, chronic mass unemployment, and widening inequality. The adoption of trade liberalisation, as part of South Africa’s embrace of neoliberal policies, has eroded its manufacturing base, making the country increasingly dependent on raw mineral exports and services, especially financial services.
At the same time, the global trading system itself is in turmoil. Donald Trump is showing how tariffs can be deployed as weapons, not only to protect domestic industry but to attack rivals in the Global South. This makes it even more urgent for countries like South Africa to rethink trade policy. If Washington can disregard WTO rules to defend its workers and industries, why should South Africa continue to bind itself to neoliberal trade dogma?
In this context, we should reconsider the important role tariffs can play in facilitating economic development in the Global South, and South Africa in particular.
The role of tariffs in economic development
Tariffs—taxes on imported goods—have long been used by states to promote and protect local industries. Neoliberal economic theory condemns tariffs as market distortions. Yet virtually all of today’s advanced economies have relied heavily on tariffs and other protectionist measures during their development.
In the 19th century, the United States imposed some of the highest tariff barriers in the world, shielding its infant industries from British dominance. Germany did the same under Bismarck, combining tariffs with state support for heavy industry. Similarly, in the 20th century Japan and South Korea used tariffs and import restrictions, along with state-led industrial policy, to climb the economic ladder.
Economist Ha-Joon Chang coined the phrase “kicking away the ladder” to describe how industrialised countries deny developing nations the same policies and tools they once used to achieve their own economic success.
Tariffs can serve several developmental functions:
- Protecting infant industries: Emerging domestic firms often cannot compete with established multinationals. Tariffs provide breathing space to build productive capacity.
- Encouraging industrial diversification: By raising the cost of imports, tariffs create incentives for local production across a wider range of goods.
- Supporting employment: A protected industrial base can provide jobs in manufacturing, often better paid and more secure than primary commodity sectors.
- Generating state revenue: Especially in the Global South, tariffs historically provided a key source of finances for the state.
The neoliberal free trade agenda
Since the 1980s, neoliberalism has rolled back tariff protections in favour of ‘free trade’. Structural adjustment programmes imposed by the IMF and World Bank forced many developing countries to liberalise trade as a condition for loans. The establishment of the WTO in 1995 consolidated this agenda at a global level, locking countries into binding commitments to reduce tariffs, eliminate subsidies, and open markets.
The WTO free trade agenda is reinforced by a web of bilateral and regional free trade agreements. For example:
- NAFTA (1994) integrated the US, Mexico, and Canada into a free trade zone. Far from uplifting Mexico’s industrial base, it led to the collapse of many small farmers (especially maize producers), while US corporations relocated to Mexico for cheap labour, undermining wages and labour rights.
- The EU’s Economic Partnership Agreements (EPAs) with African, Caribbean, and Pacific countries forced open African markets to European goods. This undermined local industries and restricted policy space for industrialisation. In Southern Africa, the EU-SADC EPA has entrenched Europe’s access to African resources while limiting the region’s ability to use tariffs to support domestic production.
The neoliberal case against tariffs is based on supposed levels of greater efficiency and on comparative advantage: countries should specialise in what they can produce most cheaply and import what others produce more efficiently. Yet in practice, this model locks developing countries into low-value, resource-based production, while global value chains remain dominated by multinational corporations headquartered in the North and in China.
For South Africa, the embrace of free trade in the post-apartheid era has had devastating consequences. Tariff reductions under the WTO, coupled with liberalisation through the EU-SADC EPA, left local industries exposed to cheap imports from China and Europe. Textiles, clothing, footwear, dairy and electronics industries dramatically contracted, wiping out hundreds of thousands of jobs. The idea that South Africa would grow its economy through exports was a non-starter. Instead, the country’s economy has become even more dependent on mineral exports, financialisation, and services.
South Africa’s crisis of deindustrialisation is getting worse. Manufacturing’s share of GDP has declined from around 25% in the early 1990s to under 12% today. Between 2008 and 2024, there was a 19.6% decline in employment levels in manufacturing, amounting to a loss of 400,000 jobs. The local steel industry, which is critical for rebuilding vital infrastructure, is in disarray, with production plunging between 2006 and 2024 from 9.7 million tonnes to just 4.7 million tonnes.
The result is our chronic unemployment. An economy that cannot provide dignified work for the majority is not politically, socially, or economically sustainable.
Using tariffs for re-industrialisation
So, should South Africa revisit the use of tariffs as part of a progressive industrial policy? Tariffs alone are not a complete solution. They must be part of a broader state-led development programme, guided by working-class interests rather than profit maximisation. But they can play a crucial role in re-industrialisation:
- Strategic protection of key sectors: Tariffs can shield priority industries (e.g., steel, renewable energy components, agro-processing, machinery) from import competition.
- Supporting regional value chains: Instead of competing in low-wage races to the bottom, tariffs could help foster regional industries within SADC, building economies of scale.
- Conditional protection: Tariffs should be linked to clear performance requirements – investment in jobs, technology, and skills – to avoid merely subsidising inefficiency.
- Defensive tariffs against dumping: South Africa faces waves of cheap imports, especially from China. Protective tariffs can defend local jobs and prevent deindustrialisation.
This requires confronting the constraints of the WTO and EU trade agreements. South Africa needs to reclaim policy space. This will inevitably put it in conflict with global capital and Northern states. Here, alliances with other developing countries—the BRICS, African Union, and progressive blocs—are essential.
Is import substitution an option?
Tariffs can shield priority industries (e.g., steel, renewable energy components, agro-processing, machinery) from import competition.
Import substitution industrialisation (ISI)—producing domestically what was previously imported—was a key strategy in many developing countries during the mid-20th century, including apartheid South Africa. While this had mixed results, it demonstrated that tariff protection could build industrial capacity.
Critics argue that ISI often produced inefficient industries, dependent on state protection, with little incentive to innovate. In Africa, ISI sometimes led to small, fragmented markets and reliance on imported capital goods. But Brazil and Mexico built significant industrial bases, while India developed a diversified economy.
For South Africa, a selective, strategic import substitution approach remains possible:
- Renewable energy equipment: Tariffs could support local production of solar panels and wind turbines, linked to a just transition strategy.
- Agro-processing: Tariffs on processed foods could encourage local value addition in agriculture, supporting small farmers and food sovereignty.
- Public procurement: Combined with tariffs, state procurement could guarantee demand for locally produced goods, such as rail rolling stock or pharmaceuticals.
The key is not a blanket return to ISI, but a new strategically-directed protectionism—using tariffs flexibly to build capacity, create jobs, and support a democratic, sustainable economy.
Towards an alternative
The goal of a progressive strategy on tariffs should not be to protect capitalists at home while exploiting workers, but to use trade policy to build a more just and sustainable economy. This means:
- Democratising trade policy: Workers, unions, and communities must have a say in which sectors are protected and how tariffs are used.
- Linking tariffs to broader industrial strategy: Tariffs alone cannot deliver development; they must be part of coordinated, public-led investment in skills training, infrastructure, and redistribution.
- Prioritising the working class and environment: Tariff protection should not entrench monopoly profits but deliver jobs, decent wages, and green industrialisation.
- Building South-South solidarity: South Africa should push for regional and global alternatives to neoliberal trade.
The neoliberal project has sought to delegitimise tariffs, portraying them as outdated and inefficient. Yet history shows that they have been central to every successful industrialisation story. For South Africa, trapped in a deindustrialising cycle and mass unemployment, tariffs remain a vital tool.
The challenge is to reclaim trade policy for the people, not for capital. This means using tariffs strategically to protect and expand key industries, foster regional integration, and build a green, labour-intensive economy. Import substitution, in a selective and strategic form, can be part of this project.
Brian Ashley is a member of Zabalaza for Socialism and serves on the Amandla! editorial collective.
Tags: Economic Partnership Agreements (EPAs) | Import Substitution Industrialisation (ISI) | NAFTA | Public Procurement | Re-industrialisation | Renewable Energy | SADC | Tariffs | World Trade Organisation (WTO)
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