US tariffs on metals to cost SA jobs
Industry failed in bid to get Trump’s nod
SOUTH Africans have reacted angrily to the imposition of blanket US import tariffs on steel and aluminium exports. These will become effective from June 1 2018, according to the Steel and Engineering Industries Federation of Southern Africa (Seifsa). It is estimated at least 7 500 workers in these industries will lose their jobs.
The tariffs will starve upstream and downstream manufacturers in SA of foreign currency.
Major companies affected include diversified metals and mining group South32, premier steel maker ArcelorMittal SA and aluminium products fabricator Hulamin.
The US measures will also be negative for SA’s foreign exchange reserves.
“The proclamation by the US will [annually] directly cost South African exporters roughly R3-billion worth of steel products and R474-million worth of aluminium products,” Seifsa chief economist Michael Ade says.
He indicates the only apparent option available to South African exporters is to convince their customers in the US to lobby for exclusions for individual companies from SA on a case-by-case basis.
South African officials have made numerous representations to US authorities over the tariffs, including two written submissions by Trade and Industry Minister Rob Davies.
But US President Donald Trump remains unmoved after he failed to exempt SA from across-the-board 25% steel and 10% aluminium tariffs on April 30 2018. He cites national security concerns and unfair trade practices by trading partners.
Ade says reduced demand from the US for these metals and possible oversupply from China could fuel another fall in global commodity prices and lead to the dumping of steel and aluminium products into SA.
This comes as the domestic metals and engineering sector clawed its way back from four successive years of negative growth, growing 2.7% in 2017.
Kobus Verster, chief executive of ArcelorMittal SA, says steel making accounts for 1.5% of GDP. It employs 190 000 people in the primary and downstream industries, adding 100 000 more jobs through raw materials suppliers and transport providers.
He says that every 1 000 tons of steel produced in SA adds R9.2-million to GDP, provides three jobs directly and three indirectly.
It also enables domestic procurement worth R5.3-million, of which R500 000 benefits small and medium enterprises, contributing R130 000 in tax.
Davies says SA is disappointed that it was not granted an exemption from the duties, unlike far bigger producers and exporters of these metals including Canada, Mexico, the EU, South Korea, Australia, Argentina and Brazil.
In its submissions, SA argued that like the US it was also grappling with a global glut of steel and that there was no risk of steel being transhipped through SA via third countries.
According to 2017 national data the US imported 33.4-million tons of steel in 2017, of which imports from SA were less than 1% of the total, and about 0.3% of total annual US steel demand of 107-million tons.
The 330 000 tons of steel exported to the US from SA last year amounts to about 5% of SA production, or about 7 500 jobs in the SA steel supply chain.
Meanwhile, SA’s aluminium exports to the US per annum are about 1.6% of total US aluminium imports.
“As such, SA does not pose a threat to US national security and to the US steel and aluminium industries, but is a source of strategic primary and secondary products used in further value-added manufacturing in the US, contributing to jobs in both countries,” Davies says.
The DA says Davies must explain his department’s contingency plans to prevent job losses in these industries.
“The DA looks forward to receiving a detailed plan from the minister on the steps that will be taken to ensure thousands of workers will not lose their jobs,” says Dean Macpherson, shadow minister of trade and industry.
The Federation of Unions of SA wants the government to appeal the US decision.
It says the tariffs will accelerate job losses in manufacturing and mining.
Meanwhile, trade union Solidarity says SA offered to restrict exports of these metals to the US to 70% of the 2017 level, but the Americans turned down this proposal.