SA automotive components companies are trying to assess the impact of US President Donald Trump’s latest about-turn on import tariffs.
A 25% duty on all imported components was due to come into effect on May 3. The same duty on imported vehicles was imposed in early April. However, US vehicle manufacturers argued that they could not find local suppliers of imported components at short notice. The loss of imports would force them to slow production, lay off workers and sharply raise retail prices.
In response, Trump announced on Tuesday a raft of compromises that he said would address these concerns. However, it’s not clear yet precisely how the new package will work. While Trump outlined some measures, administration officials said details of the full package were likely to be delayed until later this month.
Trump’s step-back is important for the SA automotive components industry, which last year exported R4.5bn of parts to the US.
Renai Moothilal, CEO of SA’s National Association of Automotive Component and Allied Manufacturers, said on Thursday that Trump’s latest executive order “has continued a recent path where we see a softening stance on broad-brush tariffs”.
Changes announced by Trump include the elimination of tariff “stacking”, through which not only are imported components subject to a 25% “hit” but so are some elements within them. For example, on top of the 25% tariff on an imported steel or aluminium bumper, the metal content faced a separate duty of its own.
Trump wrote in his executive order: “To the extent these tariffs apply to the same article, these tariffs should not all have a cumulative effect (or ‘stack’ on top of one another) because the rate of duty resulting from such stacking exceeds what is necessary to achieve the intended policy goals.”
Industry officials there say that the new measures, insofar as they are known, are complex. For example, analysts say the new rules “will allow partial reimbursement for components that make up 15% of a (US-made) vehicle’s value for one year and 10% of the vehicle’s value for the second year”.
The executive order added that companies may apply for “an import adjustment offset amount equal to 3.75% of the aggregate manufacturer’s suggested retail price value of all automobiles assembled in the US from April 3 2025, through April 30 2026”.
Moothilal said the two-year components reimbursement timeline was intended to give motor companies time to find US-based suppliers. He said the rebate system was similar to that in SA’s automotive incentive scheme.
He said: “Assemblers in the US will be allowed a percentage of duty offsets on component imports based on the retail price of vehicles they produce.”
Aftermarket and replacement parts would still be subject to the original 25% tariff.
While welcoming the easing of tariffs on components imported into the US, Moothilal said continued US policy uncertainty clouded the future for SA companies.
More than 25,000 SA-made vehicles were exported to the US in 2024. The 25% tariff on these since last month is certain to have an impact on numbers this year.
Mikel Mabasa, CEO of vehicle manufacturers and importers association Naamsa, said last week the impact was likely to be felt from July.
Moothilal said this would have a direct impact on SA components companies, which provide many of the parts for exported vehicles.
“So much has changed in the last few weeks, and continues to do so, meaning there is little certainty for automotive producers both in the US and their various supplier bases globally and in SA,” he said.
While welcoming the softening of disruptive tariffs, US auto industry officials made it clear that the new measures should be only the first step in a cohesive strategy.
Michael Robinet, vice-president of forecast strategy at automotive data and insights consultancy S&P Global Mobility, was quoted as saying: “Depending upon when all of this gets resolved, the industry will have lost anywhere between 12 to 18 months of planning because they’ve been dealing with short-term not knowing how to source, where to source, what to source.”
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