South Africa may, on paper, be eligible for preferential access to the US market under the African Growth and Opportunity Act (Agoa), but this Act is currently being dismantled piece by piece, says Nedbank Commercial Banking manufacturing national manager Amith Singh.

“The reality is that Section 232 overrides everything and we are seeing it happen – Agoa is being severely diminished by Section 232.”

Under Section 232 of the US Trade Expansion Act, the US executive has broad power to adjust imports – including through the use of tariffs, as President Donald Trump has been been doing – if foreign imports are deemed to be a threat to US national security.

“What is somewhat interesting for me is that some people are still seeing value in Agoa,” adds Singh.

“The US pulls a switch, and it happens immediately. We have to be pragmatic about this as much as want to be hopeful and optimistic.

“No action taken by the US, to date, gives us any sense of comfort that Agoa is going to continue to exist.”

Singh urges government to not play a wait-and-see game, but to be proactive.

“Relationships and partnerships are paramount at this time. Trade, Industry and Competition Minister Parks Tau says he is in talks about potentially going to the US to discuss South Africa’s position. 

“The US remains a crucial trading partner to South Africa and these efforts are encouraged in our quest for an equitable resolution that will reduce the uncertainty and stimulate confidence.”

“Formulate an approach and execute on that approach,” adds Singh.

“We don’t want to pick up the scraps after everyone else has eaten already. We need a seat at the table.”

Singh also emphasises that the US is 4% to 6% of the world’s population, and that it is possible to create a trade ecosystem away from the US.

“I get the sense that this is what is happening within SA Inc anyway, regardless of government’s actions. Business is not waiting for government to save them.

“Business in South Africa is working to build local manufacturing capacity and to find other trade partners.”

Singh says South Africa’s automotive industry is heavily affected by the US President’s new export tariff regime, with the murky status of these tariffs – on, off, paused – creating a continued sense of uncertainty.

It is also not always clear what goods are to be subjected to the levies.

This has resulted in South Africa-based business owners and managers being hesitant to send any goods to the US.

“They don’t want to export goods to the US in fear of the ships being turned around and returned to South Africa,” says Singh.

“It is too much of a cash-flow risk to load any ship destined for the US at the moment, and I get the sense it is the same for the agriculture sector.”

Singh says it seems as if the component sector – the downstream value-chain – will feel the brunt of the tariffs’ impact, and not only vehicle manufacturers.

However, he questions whether the US automotive value-chain will be able to withstand prolonged high tariffs, as no vehicle built in the US has 100% local content.

“The automotive sector is a global one, and South Africa gets parts for its vehicles from the rest of the world – and the same is the case for the US.

“How long can the US auto sector continue without suffering?

“We need to do what we must to ensure that we survive the next four years, and localisation is part of that,” notes Singh.

“Perhaps, if we work hard, we find ourselves in a better position in four years’ time than where we are currently.

“It will certainly help if the world’s developing countries, especially in Africa, unite to do so.”

Singh also urges the South African government to revisit its plans and programmes for the local automotive sector and to update its Automotive Production and Development Programme to ensure that it is market relevant.

Government can also revisit and cement its other trade agreements to ensure their continued existence.