The potential for escalating US trade pressures looms over South Africa, highlighting the risks of diplomatic strains and economic fallout in international relations.

During his bilateral meeting with German Chancellor Friedrich Merz in the Oval Office on Tuesday, 3 March, US President Donald Trump threatened to cut off trade with Spain. Markets reacted immediately, with the iShares MSCI Spain ETF dropping by 5.6% within minutes of the remarks, reflecting investor insensitivity to even rhetorical escalation from Washington.

Spain's apparent offence was its refusal to allow US forces to use its military bases for the operation linked to the strike on Iran, alongside its resistance to a US-backed Nato commitment that members increase defence spending to 5% of GDP by 2035.

Trump stated that he had instructed Treasury Secretary Scott Bessent to "cut off all dealings with Spain" and suggested that he possessed the authority to impose embargoes and halt all business with the country if he chose to do so.

The US Supreme Court recently made the correct call in striking down tariffs imposed under the International Emergency Economic Powers Act (IEEPA), curtailing the administration's ability to rely on emergency powers as a general trade instrument.

In response, the administration shifted to Section 122 of the Trade Act of 1974, introducing a temporary 10% import surcharge justified on balance-of-payments grounds....