South Africa’s trade ministry is seeking talks with the U.S. regarding new 25% tariffs on automobile imports set to take effect on April 3. The tariffs threaten local manufacturers and the economy, as South African vehicles currently enjoy duty-free access under AGOA. The automotive industry is crucial, representing a significant portion of GDP and employment. Efforts are underway to seek exemptions and formulate a bilateral trade agreement if necessary.
South Africa’s trade ministry is initiating discussions with the United States as the country’s automotive sector anticipates a significant impact from impending tariffs. These tariffs, amounting to 25%, will be enforced on automobile imports and certain parts starting April 3, which could adversely affect local manufacturers and the economy at large.
Currently, South African vehicles benefit from duty-free access to the U.S. market due to a preferential trade agreement; however, the new tariffs are set to negate this arrangement. The Department of Trade, Industry and Competition (DTIC) has warned that the tariffs could have a detrimental impact on the South African economy and its automotive industry, which contributes over 5% to the nation’s GDP and employs upwards of 116,000 individuals.
Auto exports constitute 64% of South Africa’s shipments to the U.S. under the African Growth and Opportunity Act (AGOA), with an estimated value of $2.4 billion last year. Despite this, the DTIC noted that these exports make up only 0.99% of total U.S. vehicle imports, asserting that South African products do not threaten U.S. industry. The department anticipates that the new duties will still apply to shipments under AGOA, citing recent similar determinations on steel and aluminum as precedence.
The Automotive Business Council (Naamsa), which includes major manufacturers like Volkswagen AG and Toyota Motor Corp., is working with the DTIC and the Department of International Relations and Cooperation to seek exemptions from these U.S. tariffs. Additionally, South Africa’s government is formulating a proposal for a bilateral trade agreement with the U.S. should preferential access be revoked, viewing this as a more beneficial option than the current AGOA arrangement.
Relations between South Africa and the United States have soured recently, particularly following President Trump’s return to office. His administration has suspended aid to South Africa amid unfounded allegations regarding land expropriation. Moreover, the U.S. has criticized South Africa’s diplomatic relations with Iran and Hamas, as well as its endeavors in the International Court of Justice concerning Israel’s actions in Gaza.
In conclusion, South Africa is proactively seeking discussions with the United States to address significant impending tariffs that threaten its automotive industry. The country heavily relies on its duty-free access to the U.S. market, and the potential economic repercussions of these tariffs could be severe. Efforts are underway for exemptive lobbying and the development of a bilateral trade agreement, emphasizing the need to rehabilitate U.S.-South Africa relations.
Original Source: www.newzimbabwe.com
