Trump's tariffs are the final nail in the coffin of SA's manufacturing industry

Right now, in an unassuming building at Durban harbour, crews haul in albacore and bluefin tuna destined for American tables. For decades, this “Cinderella industry,” as veteran trader Richard Kramer describes it, quietly sustained thousands of families.

The US was its most important customer: fresh tuna packed on ice, flown through Dubai and then sold in Boston sushi joints or Chicago steakhouses. That market is now effectively closed. 

“If there’s a 40% duty… if we’re getting, say, $10 a kilo … and they have to pay a 40% duty on our fish, well, they can only pay us $6 because they’re not going to pay $14,” Kramer told Daily Maverick. “It will definitely hurt the industry and it would probably force those vessels to go and seek some other outlet or just tie up.”

With 20 vessels in operation, each employing about 20 people at sea plus hundreds more in processing factories, transport and harbour support, the tuna trade supported thousands. Now a sector with a turnover of R400-million to R500-million a year faces collapse – not because the fish are gone, but because Washington slapped tariffs on its lifeline market.

South Africa is in the grip of a jobs crisis so deep that economists have begun calling it a “polycrisis”. In the second quarter of 2025, the official unemployment rate climbed to 33.2%, with 8.4 million people out of work, according to Statistics SA. Youth unemployment (ages 25 to 34) sits at a staggering 40.5%.

Read more: Mashatile declares SA’s youth unemployment crisis a ‘moral emergency’

The Reserve Bank has warned that between 30,000 and 100,000 jobs are at immediate risk from the US tariffs alone, with losses concentrated among low-skilled agricultural workers and formal sector
manufacturing employees. 

“We’ve based this [estimate] on the on­­going consultations that we have with all the sectors of the economy – from automotive, agriculture and all the other sectors that are going to be impacted – and at this stage we are sitting at approximately 30,000 jobs that could be affected [by tariffs], if it were to be mismanaged in any manner,”  director-general Simphiwe Hamilton of the Department of Trade, Industry and Competition told journalists in August. 

A month before that, Reserve Bank governor Lesetja Kganyago placed the jobs toll even higher, at about 100,000. 

The Department of Employment and Labour admitted the tariffs had “made matters worse”.

Crucially, not all the pain is imported. Many of the biggest retrenchments in 2025, at ArcelorMittal South Africa and Glencore, stem from failures at home: un­­reli­­able energy, collapsing railways and inconsistent industrial policy. The tariffs have simply exposed how vulnerable South Africa had already become.

Read more: The sad end of the road for ArcelorMittal SA

If the tuna fleet shows how foreign policy shocks can cripple an industry, Newcastle in KwaZulu-Natal illustrates the long rot at the heart of South Africa’s industrial base.

Newcastle’s identity was forged first in coal and then in steel. The 1974 opening of the Newcastle works by the state-owned Iron and Steel Industrial Corporation (Iscor) was the cornerstone of a state-led industrialisation strategy, promising development and providing employment for 1,900 people, primarily from the white working class.

That strategy crumbled with privatisation. In what some critics describe as a fire sale by the apartheid government just months before Nelson Mandela’s release, Iscor was listed on the JSE in November 1989. 

However, the truly fatal blow was the 2001 unbundling of its lucrative mining assets into Kumba Resources, which stripped the steel business of its vertical integration. 

This vulnerability was exposed after a series of acquisitions, starting with Lakshmi Mittal’s takeover in 2004 and culminating in the formation of ArcelorMittal South Africa (Amsa) in 2006. With its mandate shifted from national development to global shareholder value, Amsa flew into a perfect storm of weak local demand, cheap imports, punishing rail costs from Transnet and Eskom’s ever-worsening power crisis.

By November 2023, Amsa announced it would shut down its Newcastle and Vereeniging facilities. Despite deferrals, the closure is set for September this year. The general secretary of the National Union of Metalworkers of SA (Numsa), Irvin Jim, called it a “massive job loss bloodbath,” with more than 3,500 direct jobs at risk and thousands more in the steel and engineering value chains. 

Each job supports seven to 10 dependants, threatening the livelihoods of tens of thousands of people in northern KwaZulu-Natal.

The consequences for Newcastle are devastating, with the very real prospect of it becoming a ghost town. Emergency stopgaps from the Industrial Development Corporation and UIF’s Temporary Employer/Employee Relief Scheme have proved to be, in Amsa’s words, “temporary palliatives”.

Further down the east coast, East London faces its own existential crisis. For decades, its identity has revolved around one employer: Mercedes-Benz, whose C-Class sedan production line was highly specialised, with nearly 90% of production bound for the US.

Read more: Uncertainty and fear haunt automotive industry in wake of tariff increases

Then came 2 April, when Washington imposed a 25% tariff on cars. By August, a sweeping 30% tariff covered a broad basket of goods, hammering the auto industry. 

Vehicle exports to the US collapsed by 82% in the first half of 2025 – from 16,112 units in the first half of 2024 to just 2,875.

The East London plant was forced to shut down until 1 August. Although Numsa argued that the suspension was “part of the company’s annual plans to shut down” for training and not directly a result of tariffs, the numbers tell their own story. Exports to the US have all but disappeared.

Naamsa, the automotive business council, described the situation as “a socioeconomic crisis in the making.” With the auto sector contributing 5.3% to GDP and 22.6% of manufacturing output, and supporting more than 500,000 jobs, the tariff shock has put the industry’s entire value chain
at risk. 

It includes 210 component plants employing 82,000 people and hundreds of small suppliers that lack the diversification of larger firms.

Ford has already announced 474 job cuts. For East London, a town sustained mainly by exporting C-Class sedans to the US, the crisis feels existential.

Denise van Huyssteen, CEO of the Nelson Mandela Bay Business Chamber, says the chamber is “deeply concerned” about the impact on the automotive industry,  anchored by the original equipment manufacturers (OEMs) that assemble completely knocked down (CKD) kits into cars 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.  Around 40% of automotive employment in the country is located in the Eastern Cape,” she points out. 

The basics need to work

Van Huyssteen’s colleague, Sibongile Dimbaza, was equally dismayed when responding to the spate of job losses at Amsa, Goodyear, the Ford engine plant in Struandale and Aspen Pharmacare.

“We are saddened by the job losses which we are seeing taking place, particularly within the local manufacturing sector,” Dimbaza said in response to questions from Daily Maverick. 

“We remain deeply concerned about the state of the local economy and in particular of the manufacturing sector, which has been under pressure for a number of years due to a combination of factors, which includes the unreliability of electricity, water and sanitation infrastructure; political and municipal ­instability; rapidly de­­­clining safety and security; logistics inefficiencies; the
general lack of ease of doing business; and cheap imports.”

She added that these long-standing weaknesses, “now overlaid with the US tariffs issue and fast-moving geopolitical shifts”, have left local ma­­­nufac­tu­rers struggling to remain com­petitive.

“Manufacturing is the anchor to our local economy, with automotive being the major contributor and creator of employment. We are thus alarmed by the ongoing trend of volume reductions and along with this job losses,” she said.

There’s a clear warning from the chamber representing SA’s manufacturing heartland: “If we are to retain and attract investment and employment to the metro and country, the environment needs to be stable and predictable, and the basics need to work. 

“Global investors are fast adjusting their manufacturing footprints to assemble in those markets where they can do so the most efficiently and competitively. The stark reality is that thousands of jobs are at stake in the local manufacturing sector.”

Pretoria’s response has been reactive. Diplomats are lobbying Washington for a duty-free quota on auto exports. 

Read more: Controversy and speculation swirl around the next two G20 summits – largely due to Trump

The Department of Trade and Industry has launched a localisation support fund, an export support desk and an export and competitiveness programme. The African Continental Free Trade Area is also being touted as a future lifeline.

Numsa is pushing for a harder line: higher tariffs on imported cars, tyres and steel; stricter local content requirements; and the reconnection of coal power stations to stabilise Eskom. 

But these interventions won’t undo decades of underinvestment and mismanagement by the South African government.

As Richard Kramer points out about the fishing industry, alternative markets exist, namely Europe, Japan and China, but they are less lucrative or highly specialised. 

“The Europeans don’t pay as much as the Americans,” he said. 

“The Japanese are so finicky… It’s quite a difficult market to deal in.” 

In other words, diversification will be slow and costly. And time is something South Africa doesn’t have.

Tariffs may have triggered this round of layoffs, but the deeper wounds are self-­inflicted. Energy insecurity, logistics chaos and policy inconsistency have left industries brittle and communities exposed.

The consequences stretch beyond balance sheets. Each job loss is a household plunged into precarity. Each factory closure is a municipal tax base collapsing. Each vessel tied up is a family without food.

Unless the GNU confronts its structural failures head-on by fixing Eskom, rebuilding Transnet and crafting a coherent industrial strategy, more towns like Newcastle and East London will face collapse. South Africa’s future cannot be built on palliative subsidies and diplomatic pleas.

As the Reserve Bank has warned, the country is running out of shock absorbers. And as this year’s job losses show, without urgent reform, the dream of a more prosperous, more inclusive economy will keep slipping further out of reach. DM

This story first appeared in our weekly DM168 newspaper, available countrywide for R35.