US carmakers and their global counterparts were caught off guard by President Donald Trump’s decision to impose 25% tariffs on all foreign-made cars and auto parts entering the US. This move directly impacts major manufacturers, including Ford, VW, Stellantis, Toyota, BMW, and Mercedes-Benz. Renai Moothilal, NAACAM CEO, unpacked the implications on CNBC Africa’s Power Lunch.
Moothilal described the tariffs as a serious threat to global automotive manufacturing, including South Africa’s auto industry. The US has long been a key market, and while the full list of affected components is still unclear, the impact could be significant. He highlighted that South African automakers have benefited from duty-free access to the US under AGOA, but this new Section 232 tariff would override those trade benefits, raising concerns about how the local industry will respond.
While the tariffs take effect in April, there is still a window for negotiation. In the short term, the biggest impact may actually be on the US economy, where sudden cost increases could fuel inflation and disrupt supply chains. Auto manufacturing relies on long investment cycles, meaning US producers won’t be able to quickly shift sourcing to avoid the tariffs. This could drive up costs for both consumers and automakers.
Despite concerns, Moothilal stressed that the South African auto industry is resilient. While some component manufacturers may feel the pressure of lower export volumes, the sector has a diverse export market and opportunities to increase localisation to offset potential losses. Finding alternative markets and maintaining strong trade relationships with the US will be key. There are no immediate contract cancellations, but manufacturers are closely analysing long-term risks and strategies to mitigate potential disruptions. The industry has thrived in a globally integrated supply chain, and these tariffs could disrupt a system built on efficiency and competitiveness. As the situation unfolds, South Africa will need to be strategic, proactive, and adaptable in navigating this new trade landscape.