The South African steel and aluminium sectors are bracing for potential headwinds following the announcement of sweeping tariffs on all steel and aluminium imports by the US government. While the full impact remains uncertain, industry leaders are expressing concern over the potential repercussions for local businesses.
The imposition of a 25% tariff on all steel and aluminium imports, a move designed to protect domestic producers, could significantly impact South African exporters. Companies like Duferco Steel Processing (DSP), a major exporter of galvanized steel products to the US, face a significant threat, as 77% of their US exports could be subject to the tariff.
The South African Steel and Iron Institute (SAISI) has highlighted concerns beyond immediate export losses. The tariffs are likely to exert inflationary pressure on the US market, potentially dampening demand for South African products. Furthermore, the move could incentivize dumping by countries excluded from the US market, increasing competition for South African producers.
“The difficulty we have is that our defensive structures still take too long to act effectively against imports coming from countries with excess capacities,” said Charles Dednam, SAISI CEO, emphasizing the need for more robust measures to protect local manufacturers from unfair competition.
The Aluminium Federation of South Africa (AFISA) expressed a slightly more optimistic view, suggesting that if the tariffs are applied across all major steel-producing countries, South African exports might not be disproportionately impacted. However, they acknowledge the potential for decreased US demand due to inflationary pressures within the US market.
“We are confident that any negative impact can easily be mitigated by diversifying our exports away from the US,” said Muzi Manzi, CEO of AFISA.
The prevailing sentiment within the industry underscores the need for increased local beneficiation of aluminium products. This would enhance the competitiveness of South African exports while simultaneously stimulating domestic growth.
However, the success of such a strategy will depend on government support and the creation of a more conducive environment for domestic manufacturing.
The potential impact of these tariffs on South Africa’s economy is significant. With $518.68 million worth of iron and steel exported to the US in 2024, the industry faces the prospect of severe economic consequences if the tariffs are implemented without exemptions.
The situation underscores the complexities of global trade and the ongoing challenges faced by South African exporters in navigating a dynamic and often unpredictable international market.
