According to the United Nations COMTRADE database, South Africa, exported $518.68 million worth of iron and steel to the U.S. in 2024, according to the United Nations COMTRADE database, could face severe economic consequences if the tariffs are applied. Picture: Supplied
The South African steel and aluminium export market to the United States is bracing for a significant impact from a possible 25% additional sweeping tariff which may cripple local companies unless exemption rules are applied fairly, a slim hope with current sentiment between the two countries, observers said Monday.
This comes as US President Donald Trump announced Sunday that his administration will impose a sweeping 25% tariff on all steel and aluminium imports, a move that could have significant repercussions for South Africa’s economy.
Industry stakeholders said the broad spread of the tariffs amongst major steel producing countries would exert inflationary pressure on local producers and increase the risk of more dumping by countries cut-off from the US market.
The South African Steel and Iron Institute (SAISI) said the US market was significant to a few players in the value-chain such as the Duferco Steel Processing (DSP) plant in Saldanha, which makes galvanised flat steel products as well as some stainless steel products produced by Columbus.
Last year alone DSP’s exposure was 77% or 106 000 tons out of the 137 000 tons exported to the US.
However, if the 25% import tariff applies to everyone the impact could be less seeing that the US is a net importer of around 20 million tons.
Charles Dednam, SAISI CEO, said South African exporters found it more difficult to export products without being affected by tariffs as most countries adopted a protectionist position of some degree, some more than others, resulting in these exports seeking destinations which are least protected like the local market.
“The difficulty we have is that our defensive structures, still take too long to act effectively against imports coming from countries with excess capacities, such as the Asian countries effectively competing extensively with our manufacturing base at sub-cost levels,” he said.
Dednam said if South Africa wanted to re-industrialise its economy, it has to employ all avenues to beneficiate, localise and designate for local production.
“This should obviously not happen for all products, but South Africa has so much under-utilised capacity throughout the value chain, which could add a substantial contribution to our economy should they be afforded a more fair trading environment,” he said.
Muzi Manzi, CEO of the Aluminium Federation of South Africa (AFISA), said while details of the Executive Order were scant and which countries would be impacted, the local industry remained optimistic that the 25% duty will affect all major producers equally.
“In which case, the US market may have to adjust its demand patterns, but we do not think that as SA will be negatively impacted any more than any of the other producers,” Manzi said.
“If anything, we are concerned by the likely inflationary impact of the tariffs on the US market which is likely to dampen demand and thus resulting in slightly reduced exports to the US.
“Furthermore, we are confident that any negative impact cam easily be mitigated by diversification of our exports away from the US. We so far have not been able to service other potential markets owing to capacity constraints.”
South Africa predominantly exports primary aluminium and semi-fabricated products such as aluminium plates, sheets, and foil.
Manzi said aluminium was a globally traded commodity and there were established trading platforms such as the London Metal Exchange that determined the price of aluminium.
“As a country, we are highly competitive, as evidenced by our ability to export to the US and European global markets. AGOA does improve our competitiveness, however, other producers are experiencing countervailing and anti-dumping duties in the US market,” Manzi said.
He said the prevailing South African Aluminium Industry Roadmap which called for increased local beneficiation of the primary and semi-fabricated products exported.
“Any changes in the US may be the much needed accelerant for the local industry with government support, to realise increased downstream processing of aluminium,” he said.
Gerhard Papenfus, CEO of the National Employers’ Association of South Africa (NEASA), said the hope was that the US Trade Administration Department would use the same rules for exemption as it did during President Trump’s first term of office.
“I understand they were reasonable with the assessment of exemption applications in the first term. I wouldn’t know the criteria but I understand the USA dealt with it quite reasonably then. If there are no exemptions, the impact would be very severe on the exporters,” Papenfus said.
According to the United Nations COMTRADE database, South Africa, exported $518.68 million worth of iron and steel to the U.S. in 2024, according to the United Nations COMTRADE database, could face severe economic consequences if the tariffs are applied.
BUSINESS REPORT