In early 2025, the US administration announced sweeping tariff policies that posed a threat to, among others, South Africa’s automotive industry, which, despite the AGOA extension, still felt the effects.
Initially, a general 10% tariff for all trading partners, along with a 25% sector-based tariff on automotive vehicles and parts imports, was implemented in April 2025.
Following this, US President Donald Trump announced an additional 30% reciprocal tariff specifically on imports from South Africa, which, following initial delays, took effect in August 2025.
In 2024, US imports of automotive and automotive parts from South Africa were estimated at just over $2 billion (R33.32 billion today), while exports to South Africa were over $1.1 billion (R18.32 billion today).
Following the announcement, Minister of Trade, Industry, and Competition (DTIC) Parks Tau expressed concern regarding the tariffs.
“South Africa’s exports of automobiles account for only 0.99% of US total automobile imports and 0.27% of auto parts and thus do not constitute a threat to the US industry,” he noted.
The minister confirmed that South Africa engaged with both US authorities and the local automotive industry to discuss the implications of said tariffs.
Following deliberations between the two countries, an agreement was reached to renew the African Growth and Opportunity Act (AGOA) – a preferential programme benefiting local automotive exporters – for 12 months.
Earlier this year, the Select Committee on Economic Development and Trade welcomed the extension, while its chairperson, Sonja Boshoff, called on the government to safeguard trade relationships with the United States.
“It serves no one’s interests to create doubt about South Africa’s commitment to predictable, rules-based trade,” she said.
“Constructive engagement with key trading partners is not about compromising sovereignty, but about ensuring economic stability, protecting jobs and maintaining investor confidence.”
Boshoff noted that the extension provides breathing space, allowing the local government to stabilise key trade relationships and identify growth sectors to secure South Africa’s international posture to support economic growth and job creation.
The damage that was done
Despite the extension of the AGOA agreement, the US administration’s tariffs still affected the local and global automotive manufacturing sector.
According to automotive retail giant Motus’s 2025 annual report, before these tariffs, South Africa’s automotive manufacturing and export industry was a major beneficiary of tariff-free access to the US.
In 2024, locally manufactured vehicles made up approximately 64% of all South African exports to the US under AGOA.
When the US tariff policies were implemented, local automotive exports faced immediate cost escalations, heavily impacting the global competitiveness and profitability of Original Equipment Manufacturers (OEMs).
The tariffs also threatened to reduce export volumes and diminish incentives for future re-investment in the South African automotive industry.
This could lead to job losses and leave the local logistics infrastructure highly underutilised and inefficient, particularly in areas that are heavily economically dependent on OEM manufacturing.
Overall, Motus predicts the tariffs to weigh on South Africa’s overall GDP growth, increase the cost of doing business, and negatively impact the country’s tax base and employment rates.
Regarding the impact on its own operations, Motus noted that it is unlikely to have a direct impact on the group, since it is primarily an importer and reseller of right-hand-drive vehicles.
However, the group did highlight indirect threats to the local supply chain, which include OEM strategy realignment, possible parts oversupply, and logistics cost escalations.
Local OEMs were forced to reevaluate their costing models, while also consolidating local operations or expanding into other international markets.
Motus noted that fewer automotive component exports risk of oversupply into markets where it operates, negatively affecting demand and profit margins for local aftermarket parts and retail parts operations.
Finally, the group noted that trade tensions threaten to disrupt global shipping routes, cause port delays, and create shortages, which lead to higher operating costs across the industry.
Boshoff explained that the extension of the AGOA does not constitute a guarantee, and should be used to strengthen export performance, support vulnerable sectors and restore confidence among South African producers.
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