TRALAC - Trade Law Centre

South African car manufacturers threatened by potential US tariffs

Friday, 25 May 2018

The latest target in President Donald Trump's ongoing trade fight is imported cars and trucks.

Trump said earlier this week that the US Commerce Department is investigating possible trade actions on imported vehicles, and the administration is reportedly mulling a 25% tariff, or tax on imports, for the cars.

US imported almost 37,000 cars from South Africa last year - it was the second biggest importer of SA vehicles, after the UK (54,400). In 2016, South Africa exported vehicles worth $1.6 billion to the US (R23.5 billion). Ford, BMW and Volkswagen plants in South Africa export vehicles to the US. 

Currently, because of the African Growth and Opportunity Act (AGOA), South African car manufacturers have duty-free access to the US market. AGOA was launched under then president Bill Clinton in 2000, and South African car manufacturers have reaped enormous benefit over the years.

But Trump has disregarded AGOA. Recently, his government refused to exempt South Africa from new import duties on steel and aluminium exports. The European Union, Mexico, South Korea, Australia, Argentina, Brazil and Canada were exempted. Previously, SA steel and aluminium were imported duty free under AGOA. 

Trade experts now believe that AGOA probably won't be renewed in 2025.

His latest announcement on vehicle tariffs was widely condemned by US trade allies. Trade experts say Trump could be pushing the US into a trade war. But, it's likely that some trade partners are more worried than others.

Almost all of the top 10 countries that could get hit hardest by Trump's move maintain relatively close trade ties with the US:

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