Losing SA’s duty-free access to the US would be a potential disaster to the automotive components sector. The Tyre, Equipment, Parts Association (Tepa) is concerned about possible increased tariffs, lost contracts and supply chain disruptions.
Economists are warning that the country’s continued participation in the African Growth and Opportunity Act (Agoa), which gives 30 African nations preferential access to US markets, is potentially under threat due to deteriorating relations with the US.
It follows US President Donald Trump last week signing an executive order stopping foreign assistance to SA, citing its genocide case against Israel at the International Court of Justice and the recently signed Expropriation Act.
SA’s tyre, equipment and parts industry, which is reliant on the trade benefits to stay competitive with other markets that are subsidised, is concerned about billions in exports being at potential risk.
“Agoa has been a lifeline for equitable participation by SA’s automotive exports to the US,” said Dylan Petzer, vice-chair of Tepa, which encompasses tyre shops, fitment centres, equipment suppliers and parts outlets. Tepa has 1,855 member businesses employing approximately 45,000 people.
“For Tepa members who supply tyres, automotive components and repair equipment, the potential loss of Agoa is more than just an inconvenience — it is a direct threat to SA manufacturers and exporters wishing to compete equitably in the international market.
“Many of our members have spent years cultivating relationships with US buyers, relying on Agoa’s duty-free status to level the playing field.”
Since Agoa’s introduction, SA’s automotive-related exports to the US have surged from $151m in 2000 to $1.6bn in 2016, he said.
“Passenger vehicles dominate these numbers, but parts and accessories alone accounted for $62m in 2022.”
Petzer said it is not just about losing market share but about the domino effect.
“Our concern is that if exports drop, so does demand for locally produced rubber, manufacturing equipment and logistics services. This will result in factory downsizing, job losses and wasted investments in meeting US safety and environmental standards. Add to this a substantial loss of tax revenue to the fiscus, and we have a recipe for a potential societal disaster.”
Petzer said that while the sector waits for further developments, Tepa members will continue to explore alternative markets like the African Continental Free Trade Area (AfCFTA) and Europe as well as exploring opportunities afforded by the shift towards green manufacturing and electric vehicle components.
About a quarter of SA’s total exports to the US fall under Agoa, which was passed in 2001 by President Bill Clinton. Under Agoa, SA exported products worth $3.6bn to the US in 2023, and the act is up for renewal in September.
The SA automotive industry has been a major beneficiary of Agoa.
“Agoa has served as the bedrock of trade relations between the US and sub-Saharan Africa, specifically in the support of regional integration and the stimulation of regional value chains through Agoa’s rules permitting cumulation among programme beneficiaries," said motor industry umbrella body Naamsa.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.