A light aircraft manufacturer with factory facilities in the south of Johannesburg and in Alrode, Alberton, has found itself in the crosshairs of US President Donald Trump’s global trade war.
Sling Aircraft is the maker of two-seater and four-seater light aircraft in the deregulated aircraft category. It operates from manufacturing facilities at Tedderfield Airpark in Eikenhof and the industrial hub of Alrode, where 480 employees — including aeronautical engineers and hundreds of factory floor workers — produce 15 airplanes and aircraft kits a month from scratch.
Their two-seater turbo-engine planes, weighing up to 600kg with a maximum speed of 120 knots, are popular with customers in the US, which makes up 60% to 70% of Sling Aircraft’s market.
The conventional rule in the aviation industry has always been that imported or exported airplanes and aircraft parts are exempt from tariffs.
However, this has been upended by Trump who has fired a broadside of what he calls retaliatory tariffs on countries with which the US runs a trade deficit. The annoucnment, made on “Liberation Day”, wiped trillions off stocks in the US and around the world, destabilised major currencies, sent the price of Brent crude oil tumbling and shocked trading partners.
Imports from South Africa — except for certain commodity groups — were initially set to incur a 30% tariff, but Trump paused the tariff project and set a 90-day moratorium. However, a baseline 10% tariff still applies across the board for all countries affected.
James Pitman, co-CEO of Sling Aircraft, said the 10% was still immensely destructive and posed a major financial risk to the company. It has shipped $2.2m (R38m) worth of completed orders to the US, which are expected to arrive over the next 90 days. These will be exempt from the tariffs, but the firm also has a “substantial bloc” of US-based customers who have ordered plane kits which are still being manufactured.
Since Trump made his “Liberation Day” announcement, Sling Aircraft has been in discussions with the distributors in the US and indications are that neither the importers nor the end customers — who have already paid deposits — will be willing to pay the additional tariff. This means the company might have to absorb the extra cost.
“The 10% is also hugely destructive because it was a zero percent [before]. In most countries in the world there’s no tariff on aircraft. There’s certainly no tariff on the import of aircraft into South Africa. Every one of these customers is going to have to pay 10% or we are going to have to absorb it. I don’t think these people will want to absorb it.”
US-based distributors have since told the company to park all deliveries that have not left the factory due to the uncertainty.
“Our US distributor has instructed us to halt all deliveries; no-one will take any planes. Probably those orders will fall through. It creates an immediate cashflow crisis for any business. The haste at which this has been implemented, for a business with a three-month lead time, is hugely destructive for us. No new customers are going to commit until there’s certainty around how this will pan out. The uncertainty is damaging,” Pitman said.
The company has since spoken to all employees to explain the impact of Trump’s tariffs on the business and prepare them for possible job losses. The business has customers in Australia, Europe and southern Africa and is reallocating some of the US-ordered kits to other parts of the world.
A prime example is Citrusdal, where exports to the US form the economic heart of this vibrant town. The severity and immediate nature of the impending tariffs could mean that towns like it now face either increased unemployment or maybe even total economic collapse.
— Gerrit van der Merwe, Citrus Growers Association chairperson
“We have spoken to our employees on the risks. We have focused our marketing efforts on the rest of the world, and we are offering discounts to anyone who takes orders in the rest of the world.”
Pitman said finding alternative markets was a priority; however, the reality was that the US accounts for 50% of the global aviation market.
He said they were also engaging with the department of trade, industry & competition to try to get aircraft and aircraft kits removed from the US government’s tariff list.
While he has given the rest of the world a temporary reprieve, Trump has upped the tariff on China to 125% and the Asian giant has since reciprocated with its own 125% tariff on US goods entering its shores, in a dramatic escalation of the trade war.
Speaking to talk radio 702 on Thursday morning, trade, industry & competition minister Parks Tau, said South Africa will try to engage with the US on the recent announcements.
“The impact has been huge on the South African market… It has disrupted trade and protections with regard to investments from many multinational companies. And in many ways, it is about global supply chains, if you think about it.”
Trump’s tariffs have also unnerved citrus growers, winemakers and carmakers.
Citrus Growers Association chairperson Gerrit van der Merwe said while South Africa only exported about 5%-6% of its citrus products to the US, many rural communities in the Western Cape and Northern Cape were heavily dependent on these exports for their livelihoods.
“A prime example is Citrusdal, where exports to the US form the economic heart of this vibrant town. The severity and immediate nature of the impending tariffs could mean that towns like it now face either increased unemployment or maybe even total economic collapse.”
He said if Trump reinstated the 30% tariff, it would make South African citrus uncompetitive in the US market because a levy of only 10% had been imposed on competitors, mostly from South America. The 30% tariff would have placed an additional charge of $4.25 per carton on South African citrus.
Christo Conradie, access market and policy manager at Wine SA, said the industry body was still deeply concerned about the US administration’s decision to impose a 30% tariff on wine imports.
“The US is a high-value market for South African wine, offering strong growth potential and premium price points. It is currently the ninth-largest destination by volume and fourth-largest by value for South African wines,” he said.
While the US accounts for 6.4% of South Africa’s wine exports, the new tariffs would undermine competitiveness, reduce foreign exchange earnings, and put jobs and investment at risk across the wine value chain, he said.
Robert Lawrence, professor of international trade and investment at Harvard University’s Kennedy School who sat on president Bill Clinton’s economic advisory council, said it was a fallacy that the tariffs would induce foreign companies to set up manufacturing facilities in the US.
“The reason he’s doing this is to make the US into a manufacturing superpower again. But what he fails to recognise is that manufacturing has shrunk as a driver of both economic growth and employment in all of those countries, but particularly in the US.”
Lawrence said manufacturing accounts for just 8.5% of the US workforce, and if Trump were to succeed, it would probably add a single percentage point to overall manufacturing jobs.
“This demonstrates that manufacturing is no longer the driver of inclusive growth that it was historically. This idea of becoming a manufacturing superpower reflects a nostalgia for a bygone era.”
Come together
Trade and Industrial Policy Strategies economist Neva Makgetla said the only realistic short-term response to the threat of tariffs from the US is to step up collaborative efforts to enable South African exporters of manufactured goods to find alternative markets.
“The South African government, industry associations, oversight committees for the master plans, and other institutions with relevant capacity should urgently come together to develop programmes to assist the affected companies to identify and access new markets.”
She said an intergovernmental task team should prioritise the agreements and protocols needed to facilitate new market development. South African trade missions need to support the affected firms both with finding new customers and where necessary to establish new supply chains.
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