Mashatile warns of economic repercussions if trade dispute with US is not resolved

Deputy President Paul Mashatile has warned of serious economic repercussions across South Africa’s automotive value chain if an amicable trade agreement is not reached with the United States.

Speaking at the opening of the P20 Women’s Parliament in Cape Town on Thursday, Mashatile said that the imposition of a 30% tariff on South African automotive exports to the US threatens to disrupt established trade flows, undermine competitiveness, and put thousands of jobs at risk.

“We must highlight that there will be repercussions felt throughout the entire value chain if we do not reach an amicable trade agreement with the White House,” Mashatile said.

He noted that South African suppliers supporting domestic original equipment manufacturers (OEMs) that export to the US would likely face production cutbacks, putting pressure on planning, employment, and investment.

“Because of this, they would be unable to compete with goods from nations that have continued preferential or zero-duty access, such as those in the USMCA,” he said. 

Mashatile’s comments come at a time when South Africa holds the G20 Presidency under the theme of “Solidarity, Equality, Sustainability.”

He emphasised the need for the automotive sector, a globally integrated industry, to actively contribute to discussions around economic resilience, sustainability, and governance reform.

Addressing stakeholders gathered by the National Association of Automotive Component and Allied Manufacturers (NAACAM), Mashatile highlighted the significance of protecting one of the country's most vital industries.

Mashatile said the automotive sector accounts for 22.6% of manufacturing output and 5.2% of GDP, employing over 115,000 people, 80,000 of whom work in the component sector.

“The automotive industry holds significant potential for shared prosperity through targeted industrial development,” he said.

He commended NAACAM’s ongoing work in localisation, supplier development, and transformation.

Mashatile also expressed concern over growing internal challenges facing the sector, including infrastructure deficiencies, increased reliance on imports, and the slow transition to electric vehicles (EVs).

He revealed that twelve companies had closed over the past two years, affecting over 4,000 workers, at a time when unemployment has climbed to 33.2%.

Mashatile reaffirmed government’s commitment to supporting the sector through programmes such as the Automotive Investment Scheme (AIS), the Automotive Production and Development Programme (APDP Phase 2), and the South African Automotive Masterplan 2035.

The Masterplan aims to grow vehicle production to 1.4 million units, increase local content to 60%, double employment, and establish at least 130 new Black industrialists, he said. 

“There is significant potential to create inclusive economic participation through localisation and transformation,” said Mashatile, pointing to future opportunities such as R30 billion in new procurement through a 5% increase in localisation rates.

He also emphasised the strategic importance of the African Continental Free Trade Area (AfCFTA), saying it can reduce dependency on imports and help establish regional value chains, making African countries more self-reliant in automotive production.

Mashatile called for unity and collaboration between government, industry, and international partners.

“Together, we can build a future where prosperity is shared by all, leaving behind a legacy of growth and opportunity for generations to come.''

hope.ntanzi@iol.co.za

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