Singh: U.S tariffs a wake-up call for South Africa

The recent imposition of 25 per cent tariffs on imported vehicles by the U.S. government has sent shockwaves through export-driven economies like South Africa. This move is seen as more than just a shift in trade policy but a significant stress test on competitiveness, supply chains, and future growth prospects. Amith Singh, National Manager for Manufacturing at Nedbank, joined CNBC Africa to discuss the impacts of Trump's tariffs on South Africa's manufacturing sector. Singh highlighted the potential challenges faced by South African OEMs and Tier 1 to 3 suppliers in the automotive sector due to the heavy reliance on exports. With around 60 per cent of automotive production intended for export, the U.S. tariffs on vehicle imports from South Africa have sparked anxiety and uncertainties within the industry. Singh emphasized that the tariffs could hinder the growth trajectory of the sector, which had shown positive signs in recent years. The uncertainty around logistical routes, clearance costs, and potential impacts on local manufacturers exporting goods has added to the concerns. Despite initial disbelief in the possibility of such high tariffs, the reality has set in, prompting a strategic wake-up call for South Africa to address urgent localisation gaps in the manufacturing ecosystem. One of the critical areas highlighted by Singh is the need for a significant localisation drive in manufacturing. He stressed the importance of leveraging existing agreements, exploring opportunities within Africa, and revitalizing the 'Proudly South African' ethos to boost local production. Singh underscored the pivotal role of collaboration between the government, private sector, and financial institutions like banks in fostering a unified approach towards building a resilient manufacturing industry. Regarding the steel sector, Singh addressed the challenges faced by companies like AccelerMittal in ensuring reliable local steel supply for the auto industry. While temporary funding solutions have been put in place, he highlighted the necessity for sustainable long-term plans to enhance production efficiencies and promote localisation. Diversification of supply chains by clients and the need to forge stronger partnerships with other countries were also discussed as strategies to mitigate the impact of tariffs. In conclusion, Singh emphasized the need for South Africa to focus on reinventing its manufacturing sector, diversifying trade partnerships, and preparing for a future that prioritizes local production capabilities. The current disruption may pose tough questions, but it also presents an opportunity for the country to reposition itself in the global manufacturing landscape.