According to Reuters, South African Minister of Trade, Industry and Competition, Parks Tau, recently stated that the South African government is considering additional policy support for automakers to help mitigate the impact of U.S. President Donald Trump's import tariff hikes on vehicles.
In an interview with Power FM radio, Tau said, "We are exploring the possibility of expanding South Africa's automotive production program to soften the blow of Trump's tariffs on our auto industry. We are formulating potential incentive packages for the automotive sector and other industries to cushion the effects of these tariffs, within the limits of South Africa's fiscal capabilities."
South Africa's current Automotive Production and Development Programme (APDP) is designed to boost investment, innovation, and employment in the country's automotive sector. The program offers automakers a combination of tariff reductions, tax rebates, and production-based subsidies.
The National Association of Automobile Manufacturers of South Africa (NAAMSA) has expressed concern over the additional 25% tariff on imported vehicles announced by Trump, arguing that South African automakers will struggle to absorb the added costs. This would ultimately lead to higher prices for U.S. consumers and a reduced variety of South African vehicle models available in the market.
The U.S. is currently South Africa's third-largest export destination for automobiles. In 2024, South Africa exported vehicles worth approximately 35 billion rand (around USD 1.8 billion) to the United States, accounting for 6.5% of the country's total auto exports that year.
NAAMSA further noted that multinational automakers with manufacturing plants in South Africa-such as BMW, Ford, Isuzu, Mercedes-Benz, Nissan, and Toyota-will face significant challenges in exporting vehicles to global markets, including the U.S.
Additionally, in March this year, South Africa's National Treasury announced a 1 billion rand special funding initiative to support local production of new energy vehicles (NEVs) and batteries, while also promoting related manufacturing projects.
Back in January, reports indicated that South African President Cyril Ramaphosa had signed into law a new tax incentive aimed at encouraging the production of NEVs. The legislation offers a 150% tax deduction for companies investing in the production of electric and hydrogen-powered vehicles in South Africa, prompting Chinese automakers to consider investing in the South African auto industry.
