The Eastern Cape faces uncertainty as the automotive industry braces for the impact of looming US trade tariffs. (Photo: Deon Ferreira) 
On Wednesday, 30 July, with 48 hours to go to the deadline marking the end of negotiations on tariffs imposed on South Africa, the automotive industry and workers were waiting for news.
But none came.
President’s letter
In his open letter published on Monday, President Cyril Ramaphosa, while praising the move by BMW to manufacture the company’s new X3 plug-in hybrid at Rosslyn in Tshwane, said nothing about the looming jobs crisis in the Eastern Cape except for the following: “The industry is under growing pressure. The introduction of stricter vehicle emissions regulations in leading export destinations such as the European Union, as well as new tariffs from the United States, are expected to have a significant impact on the sector.”
Mercedes-Benz
Mercedes-Benz, the company identified as posing the most risk of a withdrawal from South Africa due to the new United States tariffs, confirmed it would start up production at its East London plant again on Thursday, as scheduled. The plant suspended production on 24 June as part of an operational shutdown.
Martha Winter, production and supply chain spokesperson for Mercedes-Benz plants in Bremen, Tuscaloosa and East London, said: “Yes, production at our East London plant will resume as planned on 31 July 2025.”
According to the National Metal Workers’ Union of South Africa (Numsa), the shutdown had led to short-time being introduced at 26 companies in the Eastern Cape – many based in Gqeberha.
On 8 July, speaking at the National Council of Provinces, Eastern Cape finance MEC Mlungisi Mvoko said Mercedes-Benz, which exports more than 90% of its vehicles to the United States, posed the most risk of withdrawal from South Africa.
He warned that the company might consider withdrawing from South Africa due to the tariff changes. Mvoko said a delegation had recently travelled to Stuttgart in Germany to engage with Mercedes-Benz in the hope of preventing a decision that would have devastating consequences for the East London Special Economic Zone (SEZ).
Update on negotiations
On Tuesday morning, Kaamil Alli, spokesperson for Minister of Trade, Industry and Competition Parks Tau, said while they understood the anxiety, they could not reveal details.
“Due to the sensitivity of the negotiations, we are unable to share details at this stage. We do understand the anxiety and we will be communicating in due course,” he said.
By Tuesday afternoon, he released a statement saying they were awaiting feedback on their trade proposals.
Read More: US-SA trade deal still in limbo as tariff deadline looms
“We remain committed to the cause as we await substantive feedback from our US counterparts on the final status of our framework deal. Despite the challenges that have been presented by this period, we have put our best foot forward, bringing together the subject specialists within our ranks that have dug deep to ensure that our country is adequately prepared for a number of potential scenarios,” he said.
He said that the department had “planned for these scenarios” and had not been idle. “We are working with other government departments on a response plan which includes a support desk within the Department of Trade, Industry and Competition (DTIC). Our response package also focuses on demand-side interventions in the impacted industries.”
Mikel Mabasa from the Automotive Business Council said his organisation had heard “nothing substantive”.
Read more: Socioeconomic crisis looms as US tariffs hit Eastern Cape’s vital automotive industry hard
CEO of the Nelson Mandela Business Chamber Denise van Huyssteen said the uncertainty about where the US/SA trade relations would go was a major issue for local businesses, especially in the automotive and agricultural sectors.
“The Eastern Cape economy is likely to be the most adversely affected in the country by these developments,” she said.
Numsa steps in, warning of a jobs catastrophe
In a letter addressed to President Cyril Ramaphosa and the Cabinet ministers heading the government’s economic cluster, Numsa general secretary Irvin Jim warned of a national jobs catastrophe and said that as a first step, the government should urgently ramp up anti-dumping measures.
He said manufacturing sectors were facing a job loss bloodbath from the dumping of products “that are competing directly with the automotive sector, components supplier value chain, the tyre sector, the steel and engineering sector in the face of a geopolitical chemistry which has been worsened by tariffs that are imposed against us by the United States of America.”
He said putting up tariffs to prevent dumping had been raised by Numsa at a recent meeting with Tau, but the extent of the crisis had forced the organisation to write the letter to Ramaphosa.
“We are facing the closure of Goodyear South Africa, which is going to lead to job losses of more than 3,000, if one looks at backward and forward linkages. This will make the communities of Kariega and Gqeberha confront worse forms of poverty, unemployment and inequalities.
Read more: Goodyear to shut down Nelson Mandela Bay manufacturing plant — 900 jobs at risk
“The component value chain, which supplies the auto industry, has given a list of many companies that have been closing. Macsteel (in Gauteng) is retrenching not less than 300 workers. If one listens to employers across various sectors, they are painting a bleak picture of a job loss bloodbath if DTIC and the International Trade Administration Commission do not take up urgent measures in protecting the local market.
Looming national catastrophe
“We are calling on the Presidency, led by President Ramaphosa, to make sure that the necessary steps and measures are taken to protect the current capacity of manufacturing and most importantly to protect jobs, as the hard lessons, both in South Africa and in the world, are such that in manufacturing, if you allow a company to close, such jobs will never come back.”
He said Minister of Finance Enoch Godongwana should urgently address legislative steps to drive localisation through procurement regulations.
The full letter from Numsa
Van Huyssteen said the looming US tariffs were a local and global issue.
“This is not just an issue which affects companies that … trade with the US, it is a global issue. The global trading system has been upended, and relationships between longstanding trading partners will shift as countries move to protect their own interests and domestic economies.
“Multinationals will also adjust their manufacturing footprints to assemble in those markets where they can do so the most efficiently and competitively.
“We are deeply concerned about the impact any reduction or shifts in the automotive landscape may have on the ecosystem which surrounds the original equipment manufacturers (OEMs), which undertake complete knocked-down (CKD) assembly in South Africa.
“These OEMs are responsible for creating well over 100,000 jobs at their own operations and within their components supplier networks. Furthermore, it is estimated that the knock-on employment impact of these OEMs and components manufacturers results in over 500,000 formal jobs being created across the entire automotive supply chain.
“The economic ecosystem around CKD (complete knocked-down) manufacturing goes beyond the component manufacturers and suppliers, extending into the logistics and transport sectors, and indirect suppliers to each plant of everything from office supplies, workwear and tools to services such as banking, IT, cleaning, catering, security, maintenance, marketing, and so on. Even beyond this, sectors such as tourism, hospitality, real estate, events and conferencing, retail, education, personal services – all benefit from the ripple effects of a strong local manufacturing base,” Van Huyssteen said.
She said it was estimated that each job in top-tier manufacturing created another four jobs through the supply chain, with substantial socioeconomic impact as each employed breadwinner supported about 10 people in extended families and communities, as well as spending their income at local businesses.
“It is vital that the government moves with speed to step up and take action to protect local manufacturing and put it on a much more level playing field with global competitors. We need better support to strengthen local manufacturing through incentives that encourage complete knocked-down manufacturing, and tariffs that favour locally manufactured vehicles over imports.
Semi knocked-down manufacturing is the process where vehicles or other products are partially assembled at the production site and then shipped to another location (usually another country) for final assembly.
“More favourable investor incentives are needed, and incentives that promote localisation of components along with policy that requires importers to localise once they reach a specified threshold of local sales,” Van Huyssteen added.
She said there were no specified free trade agreements in place with BRICS markets, and trade with these countries tended to be oriented around SA providing unbeneficated raw materials.
These countries, in turn, provided South Africa with finished manufactured products. This equation needed to become more balanced so that SA also provided manufactured goods, thus enabling the creation of meaningful local jobs, she said.
“More favourable investor incentives are needed, and incentives that promote localisation of components along with policy that requires importers to localise once they reach a specified threshold of local sales,” Van Huyssteen said. DM