Losing South Africa'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 assistance to South Africa, citing its genocide case against Israel at the International Court of Justice and the recently signed Expropriation Act.
South Africa'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 South Africa'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 about 45,000 people.
Many of our members have spent years cultivating relationships with US buyers, relying on Agoa’s duty-free status to level the playing field
— Dylan Petzer, vice-chair of Tepa
“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 manufacturers and exporters wanting 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, South Africa's automotive-related exports to the US have surged from $151m (R2.79bn) in 2000 to $1.6bn (R29.56bn) in 2016, he said.
“Passenger vehicles dominate these numbers, but parts and accessories alone accounted for $62m (R1.14bn) 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 while the sector waits for further developments, Tepa members will continue to explore alternative markets such as the African Continental Free Trade Area and Europe as well as exploring opportunities afforded by the shift towards green manufacturing and electric vehicle components.
About a quarter of South Africa's total exports to the US fall under Agoa, which was passed in 2001 by former president Bill Clinton. Under Agoa, South Africa exported products worth $3.6bn (R66.5bn) to the US in 2023, and the act is up for renewal in September.
The South African 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.
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