Heavy metal Donald Trump’s tariffs and SA steel exports
Chance for exemption for ‘friendly’ exporter countries welcomed
● A steel tariff increase announced by the US government on Thursday to protect its domestic market is unlikely to have any immediate impact on South African car manufacturers because the new measure primarily targets raw steel products and not finished products.
According to the White House, US President Donald Trump said at the signing ceremony his plan exempted Canada and Mexico from the tariffs until the finalisation of ongoing trade negotiations. Other countries that are affected, including South Africa, can apply for relief from the new duties.
Cheap steel exports by China have been the main catalyst for the latest protectionist move by the US government.
“We have to protect and build our steel and aluminium industries while at the same time showing great flexibility and co-operation toward those that are really friends of ours,” Trump said.
However, the concern from local steel industry players is that the US could still use the steel tariff hike, which affects 12 countries, as a springboard for further tariffs on even finished steel products.
But for now, the steel tariff hike is a nonevent for local car manufacturers.
Alexander Parker, manager for business communications at BMW South Africa, said: “The BMW Group South Africa has noted the US government’s proposal to increase tariffs on imported steel. It is possible that tariff hikes may have a very limited impact on our operations, but the vast majority of the steel used in the manufacturing of the new BMW X3 at Rosslyn, Tshwane, is imported from Europe and is therefore unaffected.”
Matt Gennrich, general manager for group communications at VW South Africa, said the company did not “foresee any impact” on Volkswagen South Africa’s operations as “we do not export” cars to the US from South Africa.
Kaizer Nyatsumba, CEO of the Steel and Engineering Industries Federation of Southern Africa, said in an interview this week there was a need for engagement by South African authorities with their US counterparts on the steel tariff hike.
“The tariffs are directed at specific products and not at already manufactured local goods. We do worry, however, that this step by the Trump administration may yet lead to other products being affected, and this would hit South Africa in the area of sustaining jobs and the economy,” Nyatsumba said.
The move to slap tariffs on steel and aluminium came after the US had lost its place as the primary global steel export producer to the EU and Africa, Nyatsumba said.
“We are not a big exporter of steel to the US . . . the government needs to engage the American administration so that South Africa can be exempted. This goes against [the] Agoa [US trade preference legislation].
“It’s positive that the US has made it available for countries to make a case for why they must be exempted.”
The South African Iron and Steel Institute said customs data showed that total domestic exports of primary steel products to all countries last year came to 2.4Mt, or about 35% of South Africa’s estimated primary steel output of 6Mt. The value of these exports was about R26-billion. Exports to the US make up only about 10%.
South Africa’s steel industry has been under severe strain, with the boom days of the industry, which peaked during the 2010 soccer World Cup, now a distant memory.
Steel demand has dropped significantly, in line with South Africa’s stalled infrastructure growth programme and the economic growth slowdown of the past few years.
ArcelorMittal SA, the country’s largest steel producer with about 70% of market share, has found the going increasingly difficult, with billions of rand in losses for the past seven years. However, the company says it dispatched only about 70 000t of primary
We worry, however, that this may lead to other products being affected
steel products to the US last year, which amounts to less than 2% of its total sales.
“ArcelorMittal SA’s primary markets remain South Africa and Africa overland,” it said in response to the threat of Trump’s looming tariffs. Evraz Highveld Steel and Vanadium, once the second-largest South African steel producer, is bankrupt.
The world’s biggest producers, China and the EU, are threatening retaliatory action.
Only world’s biggest steel producers, China, EU, are threatening retaliation