Trump tariffs blow for Africa’s auto market

April 02, 2025

From the newsletter

Motor vehicle imports into the US face a 25% tariff imposed by President Donald Trump starting tomorrow, which could have major ripple effects on Africa, particularly South Africa and Morocco. South Africa earned $1.52 billion from vehicle exports to the US in 2023, followed by Morocco which earned $152 million. Trump's tariffs will make their vehicles costlier.    

  • The tariff also affects auto parts imported into the US. Trump claims the tariff is aimed at protecting America's domestic automotive industry, which he argues has been undermined by excessive imports. He believes these tariffs will strengthen the US’s manufacturing sector and reduce reliance on foreign supply chains.

  • The US was South Africa’s sixth biggest export market for light vehicles in 2023, with a volume of 19,590 units. Germany is South Africa’s biggest vehicle export market, having bought 85,776 units in the same year, followed by the UK, which purchased 80,550 units.

More details

  • Trump’s tariffs are expected to increase vehicle prices in the US by thousands of dollars, affecting affordability for consumers, which could reduce vehicle sales. Further, automakers worldwide rely on integrated supply chains. The tariffs could lead to production delays and increased costs. 

  • At the same time, the Africa Growth Opportunity Act (AGOA), which grants vehicles from Sub-Saharan Africa duty-free access to the US, is also set to expire in September 2025.

  • South Africa is the main exporter of vehicles in the Sub-Saharan Africa region. Vehicles are among more than 1,800 goods with preferential access to the lucrative US market under AGOA. Morocco is another leading automotive exporter in Africa, and while it will not be affected by AGOA’s expiry, it will similarly be hit by Trump’s tariffs.   

  • AGOA was enacted in 2000 to encourage trade and investment between the United States and sub-Saharan Africa. While the programme was extended for a further 10 years in 2015, it is finally set to expire on September 30, 2025. The expiration date has raised concerns about the future of US-Africa trade relations and the potential impact on African economies. 

  • There are ongoing discussions and efforts to secure a renewal or extension of AGOA beyond 2025. The African Coalition for Trade (ACT) has voiced its support for the African Growth and Opportunity Act (AGOA) Renewal and Improvement Act of 2024. It is however unlikely that AGOA will be extended before September when it will end.

  • The ramifications will be dire across the continent, with goods from Sub-Saharan countries facing a new harsh reality in the US from October 1, 2025. South African automakers have raised concern over the impending negative impact of Trump’s tariffs.  

  • “We are currently engaging with our members and other key stakeholders, including government authorities and trade partners, to determine whether AGOA preferences remain unaffected by the latest proclamation,” says the South African Automotive Business Council (Naamsa). 

  • South Africa and Morocco are Africa’s main vehicle manufacturers. They are also the continent’s best bet for producing EVs. The former already produces the Ford Ranger PHEV pick-up in Pretoria in a factory that can be tweaked to make full EVs. The latter is also attracting significant investment in EV manufacturing, particularly from Dutch-based automaker Stellantis. 

  • With the expiry of AGOA, any EVs made in South Africa will be slapped with taxes in the US, limiting their ability to compete with locally-made EVs from firms like Tesla, Hyundai, Ford among others. This also comes at a  time when Morocco is facing scrutiny from Europe, its main vehicle market, over its business links to China. 

Our take

  • The expiry of AGOA could deter new EV manufacturers from setting up operations in South Africa, as the US market becomes less accessible. This might slow down the country's transition to EV production and impact its position in the global automotive industry.

  • South Africa may redirect its automotive exports to other markets, such as Germany and the UK, which are already major buyers. This could involve strengthening trade agreements and exploring new partnerships to mitigate the impact of losing AGOA benefits.

  • Without AGOA's duty-free access, South African vehicles exported to the US will face tariffs, making them less competitive. This could lead to a significant drop in export volumes and revenue from the US market.