US Tariffs: South Africa joins pushback on proposed tariffs on auto industry
Updated 10:36, 22-Jul-2018
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An alliance of auto manufacturers and dealers in the US is undertaking a major effort to oppose tariff plans by Donald Trump. Adding its voice of opposition at a US Commerce Department hearing is South Africa. The country is already experiencing a decline in exports, and domestic makers are feeling the pain as well. Our correspondent Daniel Ryntjes has more from Baltimore.
Over the last decade, exports of vehicles made in South Africa have reached as high as $2 billion worth each year. It's been made possible by the duty-free benefits of a U.S. initiative, the African Growth and Opportunity Act, known as AGOA, but a proposed 25% tariff on U.S. imports would wipe out that advantage.
ROB DAVIES SOUTH AFRICAN TRADE AND INDUSTRY MINISTER "If it's going to be a tool to support development on the African continent, it can't surely be that the moment someone begins to export some value-added products you get cut out. If it's like that then it just means that it's only a tool for keeping us where we are as producers and exporters of primary products."
Since Donald Trump came to office, exports of South African-made vehicles and parts have started to decline. BMW has just ended the manufacture and export of its "3 Series" sedans headed to the U.S. port of Baltimore, where up until recently, it was sending 166,000 each year. Economist Anirban Basu says Trump's combative approach is undermining confidence.
ANIRBAN BASU CHAIRMAN AND CEO, SAGE POLICY GROUP "I don't know what demand in America is going to be for South African goods in six months, twelve months. So what I might do is not make an investment, not commit to a purchase, and ultimately this brings this global economic recovery that we've been experiencing to a grinding halt, potentially. People are nervous about that. Stock markets around the world are nervous about that. And that's not good for a port."
DANIEL RYNTJES BALTIMORE, MARYLAND "Baltimore's deep water port provides a perfect location to roll off massive cargoes of finished vehicles, meaning new tariffs could jeopardize growth and investment here and in South Africa."
Ford is still sending 8,500 cargo van engines each year from a facility in Struandale, South Africa. Mercedes-Benz is still exporting from the city of East London. But South Africa should shift away from the American market, according to economist and former U.S. trade official Sherman Robinson.
SHERMAN ROBINSON PETERSON INSTITUTE "Deepen your relationships with East and South-East Asia and the EU, they are your major markets now. And in the short run, it's very expensive, it's costly to adjust. And so you probably do whatever you can to minimize the shock. But long-run you need to be planning to diversify and you are already seeing that. Companies are very leery about investing in the US now because it's very uncertain."
The Alliance of Automobile Manufacturers, representing many foreign and domestic brands is urging Donald Trump to abandon the tariff plan, telling him it will threaten jobs, raise costs for consumers and undermine US global competitiveness. Daniel Ryntjes, CGTN, Baltimore, Maryland.