South Africa Pursues US Trade Talks Amidst Looming Auto Tariffs

South Africa’s trade ministry is pursuing discussions with the US due to new 25% tariffs on auto imports, which may harm the local auto industry and economy. With significant exports under AGOA, the country advocates for exemptions while preparing a bilateral trade agreement as a fallback. The government aims to improve strained relations with the US following recent tensions.

South Africa’s trade ministry is initiating discussions with the United States as the nation’s automotive sector prepares for the implications of new tariffs imposed by Washington. These tariffs, set to begin on April 3rd, will introduce a 25% levy on imported automobiles and certain parts, leading to potential detrimental effects on local manufacturers and the overall economy.

Under the current preferential trade agreement, South African vehicles enjoy duty-free entry into the US market. However, the impending tariffs are expected to negate these benefits, creating anxiety regarding the future of trade agreements like the African Growth and Opportunity Act (AGOA). The Department of Trade, Industry and Competition (DTIC) has expressed concerns that the new duties could adversely affect the South African economy.

In 2022, auto exports from South Africa represented 64% of the country’s total shipments to the US under AGOA, with an estimated value of $2.4 billion. The automotive sector is significant, contributing over 5% to the Gross Domestic Product (GDP) and providing jobs for more than 116,000 individuals. However, South Africa’s contribution to US vehicle imports remains small, representing only 0.99% of total imports and 0.27% for auto parts, indicating that these exports do not pose a threat to the US industry.

The DTIC has indicated that the new US duties will likely apply to South African shipments benefiting from AGOA, as previous rulings on steel and aluminum duties have removed similar privileges. The tariffs are being instituted under section 232 of the Trade Expansion Act of 1962 on the grounds of national security.

The Automotive Business Council (Naamsa), comprising major manufacturers such as Volkswagen AG and Toyota Motor Corp, is currently engaging with the DTIC and the Department of International Relations and Cooperation to advocate for exemptions from these US actions. Additionally, South Africa plans to propose a bilateral trade agreement to the US should it lose its current preferential access, viewing a negotiated agreement as a more sustainable alternative than reliance on AGOA.

The South African government, led by President Cyril Ramaphosa, aims to improve relations with the US, which have worsened since President Trump took office. Notably, aid to South Africa has been halted amidst misleading allegations regarding land expropriation involving white farmers. Furthermore, the US has criticized South Africa for its diplomatic ties with Iran and its legal actions concerning Israel’s actions in Gaza.

In summary, South Africa is proactively engaging with the United States to mitigate the impact of new tariffs on the automotive industry. These tariffs threaten to undermine the benefits of AGOA, potentially affecting the local economy and employment rates significantly. The South African government is exploring the possibility of a bilateral trade agreement as an alternative to AGOA, aiming to strengthen and stabilize trade relations with the US moving forward.

Original Source: www.newzimbabwe.com