Trump's tariff impact: SA's automotive sector in the crosshairs

The automotive industry in South Africa is facing a period of uncertainty as President Donald Trump's new tariffs on steel and aluminum threaten to disrupt global trade dynamics. Renai Mothilal, CEO of the National Association of Automotive Component and Allied Manufacturers, shared insights on the potential impact of these tariffs on the country's auto sector in a recent interview with CNBC Africa. President Trump's recent announcement of 25% levies on US imports of steel and aluminum, effective from March 12th, has raised concerns in the automotive industry. Mothilal highlighted that while South Africa has not enjoyed exemptions from these tariffs in the past, the new across-the-board application may actually level the playing field in the steel sector. However, the increase in tariffs on aluminum could pose challenges for South African companies, such as Hewleman, which are major exporters to the US market. Mothilal emphasized the importance of the African Growth and Opportunity Act (AGOA) in the auto sector, stating that any changes in tariff policies could impact South African competitiveness in the US market. He noted that the country's high reliance on exports makes it vulnerable to global protectionism trends. Despite the challenges posed by tariffs and changing trade dynamics, Mothilal identified potential opportunities for the South African automotive industry. He pointed out that if the US economy struggles to respond to the increased costs of imported materials, South African exports could benefit. Additionally, the transition to electric and hybrid vehicle technologies presents opportunities for growth and localization in the industry. Looking ahead to 2025, Mothilal acknowledged the current flat outlook for the automotive sector but remained optimistic about potential green shoots. He highlighted the need for policy responses to support industry growth, including optimizing domestic market growth and deepening the value chain through greater localization. In conclusion, Mothilal stressed the importance of proactive policy interventions from the South African government to protect the country's position in key export markets. He emphasized the ongoing collaboration between industry stakeholders, labor, and government to navigate the challenges and seize opportunities for the automotive sector's long-term growth.