The United States’ decision to remove South Africa from the African Growth and Opportunity Act (Agoa) is expected to hamper efforts to attract future investment into the country’s automotive manufacturing sector.
The move introduces fresh uncertainty over access to the US market, a factor that has long influenced manufacturers’ investment and production decisions.
The US government on Monday gave South Africa 60 days’ notice that its Agoa participation will be terminated from January 1. Once South Africa exits the programme, products exported to the US will lose their duty-free status and become subject to standard US import tariffs.
Vehicle exports plunge
The announcement comes when the local automotive industry is grappling with the impact of US trade restrictions.
The National Association of Automobile Manufacturers of South Africa (Naamsa) said in August that the 25% Section 232 tariff on vehicles and automotive parts, introduced in 2025, had effectively nullified Agoa benefits for the sector.
As a result, vehicle exports to the US plunged 83.2% to 4 136 units in 2025, down from 24 682 units in 2024. Despite the decline, the automotive industry contributed 23.8% of South Africa’s manufacturing output.
Naamsa chief economist Dr Paulina Mamogobo told Sunday World that market access and policy predictability remain key considerations in manufacturers’ long-term investment and production planning.
Market access and policy certainty
She said the proposed withdrawal underscores the importance of maintaining competitive market access and policy certainty to support future investment, production allocations and industrial expansion.
“The precise additional implications of losing Agoa will depend on the applicable US tariff classifications and customs treatment. Nevertheless, the development reinforces the importance of preserving predictable and commercially viable market access through continued diplomatic engagement.”
Mamogobo added that continued engagement between South Africa and the US remained critical given the long-standing automotive trade and investment relationship, as well as the mutual economic benefits of maintaining commercially viable trade arrangements.
Alternative markets
She said the sector would continue to pursue export market diversification through existing trade agreements, including the EU-SADC Economic Partnership Agreement, the SACUM-UK Economic Partnership Agreement and the African Continental Free Trade Area (AfCFTA).
However, she cautioned that developing alternative markets takes time and cannot immediately replace the value of established relationships.
Azwimpheleli Langalanga, a geopolitical adviser and trade and investment lawyer, said South Africa’s automotive sector could attract investment, particularly from manufacturers targeting markets beyond the US.
He noted that business and government were exploring export diversification opportunities, including markets in Africa through the AfCFTA, as well as Canada and the Gulf region.
However, significant challenges remain, including intra-African trade barriers and inadequate infrastructure.
He also said African economies and household incomes would need to grow further to generate stronger demand for South African-built vehicles.
Martlé Keyter, chief executive for operations at the Motor Industry Staff Association, echoed the view that Africa presents significant growth opportunities for the sector.
However, she urged the government to use the remaining period before the withdrawal takes effect to negotiate South Africa’s return to Agoa while also seeking a sector-specific arrangement on Section 232 tariffs.
- The US announced it will terminate South Africa's participation in the African Growth and Opportunity Act (Agoa) effective January 1, removing duty-free access for South African exports to the US.
- South African vehicle exports to the US dropped 83.2% to 4,136 units in 2025 due to the 25% Section 232 tariffs introduced in 2025 and Agoa limitations.
- The automotive sector contributed 23.8% of South Africa’s manufacturing output despite export declines.
- Industry leaders emphasize the need for predictable market access and continued diplomatic engagement with the US to support investment and production planning.
- The sector is exploring export diversification through agreements with the EU-SADC, SACUM-UK, and AfCFTA, while facing challenges like trade barriers, infrastructure deficits, and the need for growing African markets.
The United States’ decision to remove South Africa from the African Growth and Opportunity Act (Agoa) is expected to hamper efforts to attract future investment into the country’s automotive manufacturing sector.
The move introduces fresh uncertainty over access to the US market, a factor that has long influenced manufacturers’ investment and production decisions.
The US government on Monday gave South Africa 60 days’ notice that its Agoa participation will be terminated from January 1. Once South Africa exits the programme, products exported to the US will lose their duty-free status and become subject to standard US import tariffs.
The announcement comes when the local automotive industry is grappling with the impact of US trade restrictions.
The National Association of Automobile Manufacturers of South Africa (Naamsa) said in August that the 25% Section 232 tariff on vehicles and automotive parts, introduced in 2025, had effectively nullified Agoa benefits for the sector.
As a result, vehicle exports to the US plunged 83.2% to 4 136 units in 2025, down from 24 682 units in 2024. Despite the decline, the automotive industry contributed 23.8% of South Africa’s manufacturing output.
Naamsa chief economist Dr Paulina Mamogobo told Sunday World that market access and policy predictability remain key considerations in manufacturers’ long-term investment and production planning.
She said the proposed withdrawal underscores the importance of maintaining competitive market access and policy certainty to support future investment, production allocations and industrial expansion.
“The precise additional implications of losing Agoa will depend on the applicable US tariff classifications and customs treatment. Nevertheless, the development reinforces the importance of preserving predictable and commercially viable market access through continued diplomatic engagement.”
Mamogobo added that continued engagement between South Africa and the US remained critical given the long-standing automotive trade and investment relationship, as well as the mutual economic benefits of maintaining commercially viable trade arrangements.
She said the sector would continue to pursue export market diversification through existing trade agreements, including the EU-SADC Economic Partnership Agreement, the SACUM-UK Economic Partnership Agreement and the African Continental Free Trade Area (AfCFTA).
However, she cautioned that developing alternative markets takes time and cannot immediately replace the value of established relationships.
Azwimpheleli Langalanga, a geopolitical adviser and trade and investment lawyer, said South Africa’s automotive sector could attract investment, particularly from manufacturers targeting markets beyond the US.
He noted that business and government were exploring export diversification opportunities, including markets in Africa through the AfCFTA, as well as Canada and the Gulf region.
However, significant challenges remain, including intra-African trade barriers and inadequate infrastructure.
He also said African economies and household incomes would need to grow further to generate stronger demand for South African-built vehicles.
Martlé Keyter, chief executive for operations at the Motor Industry Staff Association, echoed the view that Africa presents significant growth opportunities for the sector.
However, she urged the government to use the remaining period before the withdrawal takes effect to negotiate South Africa’s return to Agoa while also seeking a sector-specific arrangement on Section 232 tariffs.
