South Africa’s automotive sector faces a looming threat from US President Donald Trump’s planned 25% tariffs on foreign cars, the National Automobile Dealers’ Association (Nada) warned on Thursday.
US President Donald Trump said this week he plans to impose auto tariffs on foreign cars of around 25%.
Semiconductor chips and pharmaceuticals are also set to face higher duties. This after he also recently announced tariffs on a 25% tariff on all imported steel and aluminium.
A tariff is a tax imposed by the government of a country or by a supranational union on imports or exports of goods.
Trump said 25% tariffs would come as soon as April 2. He said the tariff would gradually rise, penalising automakers that export cars to the US rather than making them in the US.
The US market is the second largest export market for South African vehicles, importing vehicles, aircraft and vessels worth more than R19 billion in 2022 and expanding South African exports to R25.2 billion in 2023, according to a Solidarity report on Agoa.
“Any disruption to this trade could have far-reaching consequences for local manufacturers, not only in vehicle exports but also in the supply of critical automotive components,” Nada said. It cautioned that a shift in the current trade landscape may impact the stability and sustainability of manufacturers, potentially affecting local production capacity, employment and the broader supply chain.
“The interconnected nature of global automotive manufacturing means that any changes to established trade relationships could have unintended ripple effects across various markets,” it said.
The National Association of Automobile Manufacturers of South Africa declined to comment.
Meanwhile, the pharmaceutical sector appears unscathed.
Stavros Nicolaou, the chairman of the South African Pharmaceutical Producers Association, said on Thursday that South Africa does not export drugs to the US, and existing licensing agreements with American firms would be unaffected by the tariffs.
Adriaan Pask, the chief investment officer at PSG Wealth, said this week that Trump’s proposed 25% tariffs on automobiles, semiconductors, and pharmaceutical products, received a muted market reaction, which “suggested investors had become desensitised to repeated tariff threats with limited enforcement”.
In contrast, Hulamin, a Pietermaritzburg-based aluminium firm, sees opportunity. Its rolled and extruded products, used in modern cars and light commercial vehicles, account for 11% of its exports to the US.
Previously hit with a 10% duty while rivals in the EU, Japan, Mexico, and Canada paid nothing, Hulamin now benefits from the universal 25% levy. “The duties announced on February 10, 2025 will have no impact on our competitive position in the US market,” the company said.
“As all competitors will be subject to the 25% tariff, our position will improve.” Shares surged nearly 13% to R2.80 on the JSE by 3.10 pm Thursday on this upbeat note.
Hulamin expects stable US export volumes and margins but warned that further US policy shifts could alter its outlook.
BUSINESS REPORT