Naamsa The Automotive Business Council has voiced its concern over the recent announcement by U.S. President Donald Trump introducing additional tariffs on all imported products to the world’s biggest economy.
The announcement contained a 30% tariff on all South African products exported to the United States, as well as a 25% tariff on vehicles and automotive products produced outside the Western country.
While Trump has since paused the implementation of these tariffs for 90 days, fears remain that they could wreak havoc on the local automotive manufacturing sector should they be applied unchanged.
“While we hope the South African government will activate all available diplomatic channels with the Trump administration, these recent announcements are yet another challenge to a sector already grappling with multiple headwinds,” said Naamsa.
It expressed that the proposed tariffs can’t be absorbed by manufacturers as their margins are already stretched as is.
This will result in additional costs for US consumers and a reduced choice of South African-made products.
“Urgent trade discussions must be initiated and prioritised and this is why we urge the South African government to continue negotiating and delivering solutions that supports job creation, consumer demand, and economic growth,” said Naamsa.
“These tariff decisions, seen as part of a broader shift toward reciprocal tariffs, threatens to disrupt South Africa’s automotive exports and undermine our longstanding trade relationship with the US.”
The US is the third-largest destination for South African automotive exports, with approximately R35-billion worth of vehicles shipped in 2024, accounting for 6.5% of total vehicle exports.
The proposed 25% tariff increase will severely impact local manufacturers operating in South Africa, including BMW, Ford, Isuzu, Mercedes-Benz, Nissan, Toyota, and VW.
South Africa is also the largest producer of catalytic converters globally, a good portion of which are earmarked for the States.
Speaking at the sidelines of the Gauteng Investment Conference in Johannesburg earlier this month, Naamsa CEO Mikel Mabasa warned that the US move could have serious implications for jobs and investment in South Africa’s automotive sector.
“The US decision to impose these tariffs undermines existing trade agreements and the principles of a fair, rules-based trading system,” said Mabasa.
“The South African auto industry contributes significantly to economic development, employment, and industrialisation, and these tariffs could undermine our progress.”
The Department of Trade, Industry, and Competition (DTIC) has confirmed that it will seek an audience with the US presidency to discuss the new tariffs and the potential consequences they could have on our vehicle sector.
Looking elsewhere
One way South Africa could soften the blow of the impending tariffs is to look elsewhere for countries that are willing to purchase locally made goods.
This is the view of auto industry veteran Kriben Reddy, which urged government to look for new markets for the country’s automotive exports that will be impacted by the US trade war.
He highlighted that due to South Africa’s extensive infrastructure for automotive manufacturing, it is “primed to be competitive in other export markets.”
He referred to countries such as China and India, whose volumes have surpassed most all major vehicle export economies in recent years including the US.
They achieved these impressive feats partly through focusing their attention on markets in Africa, Asia, the Middle East, and Latin America.
Meanwhile, Naamsa’s Mabasa said that South Africa could respond in kind to the US should it forge ahead with the punitive tariffs.
“The challenge for the United States, that they need to carefully look at, is the fact that a lot of African countries including South Africa have a lot of mineral resources that they actually need in order for them to produce their vehicles,” said Mabasa in an interview on 702 radio station.
“So, if they hurt us quite significantly, we are obviously going to lobby and appeal to our government in South Africa and the rest of the continent to reciprocate in kind.”
This may see the minerals being purchased by the United States from African nations being subjected to equal or higher tariffs.
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