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A better understanding about the impact on South Africa’s automotive industry of the new US 25% import tariff on all automotive imports is expected later this week.
National Association of Automotive Component and Allied Manufacturers (Naacam) CEO Renai Moothilal said on Monday Naacam is obviously very concerned because preferential trade into the US market has been a bedrock of component production and adding scale to domestic component production for a number of years.
Moothilal said that as long as the Africa Growth and Opportunity Act (Agoa) has been in force, there has been an increasing rate of penetration into the US market.
South Africa benefits from duty-free access to the US market under Agoa, which remains vitally important to the South African automotive industry.
In 2023, the US was South Africa’s second-biggest automotive trading partner after Germany, with total trade between the two countries valued at R56.75 billion.
This comprised R27,94 billion in exports from South Africa to the US and R28,8 billion in imports from the US.
Moothilal said it is important to note that the US tariffs are tariffs imposed under Section 232 of the US Trade Expansion Act of 1962, which means effectively that they will override the Agoa agreement.
“What we are still waiting for is a final list of whether it’s all components or what components will be covered by this Section 232.
“The initial indication is that from 3 April 2025 that will be open for comment for a month so we should have better clarity later this week.
“But the impact overall is still very significant,” he said.
“We do think that given that it applies to all countries across the world, in the short term South African components will still be accepted into the US market because, even if companies wanted to respond immediately, it does take time to invest and build up components that have been exported into a market over a long term.”
Automotive business council Naamsa also highlighted the uncertainty created by US President Donald Trump’s import tariff proclamation.
Naamsa said it is actively assessing the potential impact of the 25% tariff imposed on imported automobiles and certain automobile parts into the US and is currently engaging with its members and other key stakeholders, including government authorities and trade partners, to determine whether Agoa preferences remain unaffected by the latest proclamation.
It said the South African automotive industry has built a strong export relationship with the US, particularly in the supply of light vehicles and automotive components, and any potential disruption to trade flows will require close collaboration between industry and government to ensure the continued competitiveness of South Africa as a global automotive manufacturing hub.
“Naamsa remains committed to supporting open, fair, and mutually beneficial trade policies and will continue monitoring developments while engaging with relevant US and South African trade authorities. We will provide further updates as more clarity emerges in the coming days.”
The Ford Motor Company of Southern Africa, Toyota South Africa Motors (TSAM), Volkswagen Group Africa (VWGA) and Isuzu Motors South Africa all confirmed to Moneyweb they did not export any vehicles to the US and would therefore not be affected by the proposed US tariff increase.
Nissan South Africa has not yet responded to Moneyweb’s query.
Mercedes-Benz South Africa (MBSA) and BMW South Africa both have exposure to the US market in terms of fully built-up vehicle exports into that market.
Both were coy in their responses to a query about the impact of the proposed new US import tariffs on their operations and how they plan to mitigate their impact.
MBSA general manager of corporate affairs Thato Mntambo said the company does not disclose its vehicle sales volumes and is unable to comment on this aspect of Moneyweb’s query. – Moneyweb
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