South Africa Engages U.S. Amid Looming Tariffs on Auto Imports

South Africa is seeking talks with the U.S. as the automotive sector braces for a 25% tariff on imports. This tariff, effective April 3, poses significant risks to local manufacturers and the economy. The government aims to navigate the implications for AGOA and may pursue a bilateral trade agreement if necessary.

South Africa’s Trade Ministry is initiating discussions with the United States as its automotive sector prepares for the repercussions of imminent tariffs. These new duties, set to take effect on April 3, will impose a 25% tariff on automotive imports and some components, posing a potential threat to local manufacturers and the national economy.

Currently, South African vehicles are granted duty-free access to the United States under a preferential trade agreement. However, this newly proposed tax could negate that advantage, which the Department of Trade, Industry, and Competition (DTIC) asserts could have detrimental effects on the economy.

The recent tariffs, announced by President Donald Trump, signify an escalation in the ongoing trade conflict and occur during a period of strained relations between Pretoria and Washington. There is concern regarding the impact on trade agreements like the African Growth and Opportunity Act (AGOA), which supports South African exports to the U.S.

In 2022, auto exports from South Africa comprised 64% of the total shipments to the U.S. under AGOA, amounting to $2.4 billion. The country’s automobile sector, pivotal to the economy, represents over 5% of gross domestic product, employing approximately 116,000 individuals.

South Africa’s automobile exports form a small fraction of total U.S. vehicle imports, accounting for only 0.99% of total vehicles and 0.27% for auto parts, as noted by the DTIC, who argues that these statistics demonstrate South Africa is not a threat to the U.S. auto industry.

The DTIC is uncertain whether these tariffs will impact AGOA shipments since similar measures on steel and aluminum have nullified preferential treatment. The tariffs are being instituted under Section 232 of the Trade Expansion Act of 1962, citing national security.

The South African Automotive Business Council, which includes major manufacturers like Volkswagen AG and Toyota Motor Corp, is actively engaging with the DTIC to advocate for exemption from the executive actions imposed by Washington.

In response to potential revocations of preferential access, South Africa plans to propose a bilateral trade agreement with the U.S. President Cyril Ramaphosa’s administration believes this approach may be more beneficial than the current preferential treatment under AGOA.

South Africa aims to improve its relationship with the U.S., which has deteriorated under Trump’s presidency. The U.S. has criticized South Africa’s relations with countries like Iran and Hamas, in addition to the government’s actions regarding land redistribution, which has been misrepresented in media narratives.

In summary, South Africa is calling for negotiations with the United States due to the impending 25% tariff on automotive imports, which threatens local manufacturers and the economy. The outcome of these discussions could determine the future of trade agreements, particularly under AGOA. There is also contemplation over establishing a bilateral trade agreement to safeguard South Africa’s economic interests moving forward.

Original Source: www.newzimbabwe.com