South Africa eyes AfCFTA to offset US tariffs blow, as trade leaders gather at Automechanika CEO breakfast

May 11, 2025 in Business, Companies, Infrastructure, Investment, Trade & Industry by Editor

The recent imposition of steep U.S. tariffs on South African vehicle exports has sent ripples through the country’s automotive sector, prompting urgent calls for diversification and deeper regional integration. But as doors close in traditional markets, industry leaders believe a new one is opening: the $3.4 trillion African Continental Free Trade Area (AfCFTA).

This sentiment took center stage on Thursday at the Automechanika CEO Breakfast—The African Connection—hosted by Messe Frankfurt South Africa at Centurion Country Club. Bringing together top executives and trade experts, the event tackled the challenges and opportunities presented by shifting global trade dynamics, with a focus on AfCFTA, AGOA, BRICS, and the implications of new tariffs.

In March and May 2025, the U.S. introduced sweeping new tariffs—25pc on South African vehicles and components, and a 10pc baseline tariff on all imports—effectively dismantling South Africa’s longstanding advantage under the African Growth and Opportunity Act (AGOA). Until now, 99pc of the country’s auto exports to the U.S. had entered duty-free.

The impact was immediate. According to Dr. Paulina Mamogobo, Chief Economist at NAAMSA, South African automotive exports to the U.S. fell from 6pc in 2024 to just 2pc in the first quarter of 2025. The U.S is South Africa’s second-largest export market, with the auto sector comprising 15pc of total exports.

“The tariffs have delivered a severe blow, but not a fatal one,” Mamogobo said. “Our export volumes were quickly redirected to other markets. The data will be fully revealed in the Automotive Trade Manual launch on May 15.”

In the face of this setback, many at the event pointed to AfCFTA as a powerful counterweight. By eliminating tariffs and harmonizing trade across 44 countries, AfCFTA offers access to a unified market of 1.3 billion people with a combined GDP of $3.4 trillion.

Mamogobo emphasized that the continental free trade zone is more than a fallback—it’s a strategic reorientation. “AfCFTA is not just about buffering trade shocks. It’s about shifting our export mindset toward Africa and building a sustainable automotive value chain across the continent,” she said.

However, she cautioned that trade liberalization alone is not enough. “Infrastructure remains the elephant in the room. Poor road and rail networks limit how fast and how far we can scale.”

The event also shed light on global dynamics complicating the African auto market. Ronel Oberholzer of S&P Global Market Intelligence warned of a looming flood of Chinese electric vehicles into African markets, spurred by overproduction. Indian manufacturers, meanwhile, pose fierce competition due to their ultra-low-cost production models.

“The BRICS connection may not yield large export opportunities for South Africa, but it can bring valuable investment,” said Oberholzer. “We need to channel that into building local capacity.”

Jenny Tala of Germany Trade & Invest argued that the new U.S. tariffs have essentially neutralized AGOA’s benefits, reinforcing the urgency to expand trade with regional

neighbors and emerging markets beyond traditional partners.

Despite the challenges, some panelists saw a silver lining. Duane Newman, Partner at EY South Africa, noted that protectionist moves by the U.S.—especially under the Trump administration’s renewed focus on internal production—may paradoxically benefit South Africa.

“With U.S. policy drifting away from EV incentives and toward re-shoring ICE vehicle production, South Africa’s existing capabilities could attract investment from multinational firms seeking to diversify supply chains away from China and Mexico,” Newman said.

However, Donald MacKay, CEO of XA Global Trade Advisors, urged a sober view. “We can’t ignore the cost of moving goods across Africa. Rail is half the cost of road freight but still five times more expensive than maritime shipping. If we’re serious about regional trade, we must invest in infrastructure.”

The breakfast ended with an optimistic note from Messe Frankfurt South Africa’s Managing Director, Michael Dehn.

“As the global trade map is redrawn, platforms like Automechanika Johannesburg are vital spaces for forging new alliances,” Dehn said. “We can’t predict the future, but we can shape it—and it starts with African collaboration.”

With the U.S. market slipping under the weight of new tariffs, South Africa’s automotive industry is turning inward—to Africa. The AfCFTA may not be a quick fix, but it’s increasingly seen as the cornerstone of the continent’s automotive future.