Spokesperson: Karen Keylock, National Manager for Retail Services at Nedbank Commercial Banking

At Nedbank Commercial Banking, we appreciate the efforts of the DTIC in attempting to fast track a trade agreement with the US.

The tariff negotiations, unfortunately, failed and the proposed 30% tariffs have been imposed as of today, Friday 1 August 2025. While the agriculture and automotive sectors are likely to be hardest hit by the new tariffs, the retail sector – particularly franchising – may face consequences, and potential opportunities. These include:

Slowdown on SA exports will put pressure on the South African consumer

The slowdown of SA exports to the US will hurt certain sectors, which would likely weaken the rand, reduce disposal income and, thus, dampen local consumer spending. This is bad news for the whole retail sector, but particularly franchising, which relies on strong middle-class spending power.

Retailers that rely on US imports will face higher costs

US based franchises operating in SA (like McDonalds, Burger King, Starbucks) may struggle to keep pricing competitive if they import branded or speciality items. This may force franchise owners to source locally, which may involve compromises on brand consistency or increased lead times.

Franchise expansion could slow down

Tariffs uncertainty may cause US franchisors to delay new entries or scale back expansion plans to SA, while franchise fees and royalties paid in USD become more expensive in a weaker rand environment

Strategic shifts in franchise chains

We may see franchise brands rerouting their supply chains, either sourcing from countries with favourable trade agreements or investing in in–market production in SA.

Opportunity for localisation and regional diversification

Local franchises (like Nando’s, Debonairs, Chicken Licken) might gain market share in South Africa if US brands struggle to maintain profitability. Some international brands may pivot to manufacturing or sourcing within SA to avoid tariffs altogether which, in turn, would boost local suppliers.

In our experience at Nedbank, South African and African international businesses are resilient and, while they appreciate any support provided, they are strategic enough to take control of their own future by seeking appropriate trade advice and products. We have identified that our clients are already exploring and engaging subject matter experts or are adapting their long-term plans to ensure business survival. These strategies are with a view to seeking a more efficient supply chain system, reducing trade barriers and leveraging local supply and demand.

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