South Africa Pursues US Trade Talks Amid Imminent 25% Tariff Impact

South Africa’s DTIC is negotiating with the US regarding new 25% tariffs on automobiles and parts set to take effect April 3. The tariffs could heavily impact local manufacturers and threaten preferential trade benefits under AGOA. The automotive sector, vital to the economy, may pursue a bilateral trade agreement with the US if AGOA is revoked.

South Africa’s Department of Trade, Industry and Competition (DTIC) aims to engage in discussions with the United States regarding the recent tariffs imposed on automobiles and parts. Beginning April 3, Washington will implement a 25% levy, which poses threats to local manufacturers and the broader economy. Previously, South African vehicles benefited from duty-free access under a preferential trade agreement, but the new tariffs will negate this benefit, potentially harming economic performance.

The looming tariffs, part of President Donald Trump’s extensive trade measures, have raised concerns about the future of trade relations between South Africa and the US. Specifically, the African Growth and Opportunity Act (AGOA), which allows many South African products to enter the US market without tariffs, may be at risk as these tariffs could impact 64% of South Africa’s exports to the US, valued at approximately $2.4 billion in automobile shipments last year.

According to the DTIC, South Africa’s automobile exports are minimal in comparison to total US vehicle imports, comprising only 0.99% of the overall vehicle imports and just 0.27% of auto parts. This suggests that they do not represent a real threat to the US automotive sector. The department is currently assessing how the new duties will interact with AGOA, as previous rulings on steel and aluminum have invalidated the preferential treatment established under this act.

The South African Automotive Business Council (Naamsa), which includes major companies like Volkswagen AG and Toyota Motor Corp., is collaborating with the DTIC and the Department of International Relations and Cooperation to seek exemptions from the US tariffs. Additionally, South Africa plans to propose a bilateral trade agreement with the US, should the current preferential treatment be withdrawn, believing that a negotiated deal would offer more security than AGOA.

The South African government acknowledges the need to improve relations with the US, which have worsened under President Trump, who has halted aid to the nation due to misleading accusations about land reforms. Moreover, South Africa is under scrutiny from the US concerning its dealings with Iran and other international political matters.

In summary, South Africa’s automotive sector faces significant challenges due to the impending 25% tariffs imposed by the United States, affecting their previously duty-free exports. The DTIC is actively seeking negotiations to mitigate the economic impact and is exploring a potential bilateral agreement with the US as a fallback option. As relations between Pretoria and Washington fluctuate, the future of trade agreements such as AGOA remains uncertain.

Original Source: www.newzimbabwe.com