In response to the potential impact of U.S. tariffs on South Africa’s automotive industry, the South African government is considering additional policy support for car manufacturers. According to a report by Reuters, Parks Tau, South Africa’s Minister of Trade, Industry, and Competition, stated that the government is exploring ways to expand the country’s Automotive Production and Development Program (APDP) to mitigate the effects of the tariffs imposed by former U.S. President Donald Trump.

During an interview with Power FM, Minister Tau emphasized that the government is working on potential incentive schemes for the automotive and other industries to ensure that the impact of the tariffs is alleviated within the country’s fiscal capacity. The APDP, which is currently in place, aims to promote investment, innovation, and employment in South Africa’s automotive sector. It offers various tariff reductions, tax rebates, and production-based subsidies to car manufacturers.

The National Association of Automobile Manufacturers of South Africa (NAAMSA) has expressed concerns over the additional 25% tariff on imported vehicles, arguing that South African manufacturers may struggle to absorb the increased costs. This could lead to higher prices for U.S. consumers and a reduced selection of South African car models in the U.S. market.

The United States is currently the third-largest destination for South African vehicle exports. In 2024, South Africa exported cars worth approximately 35 billion rand (around $1.8 billion) to the U.S., accounting for 6.5% of the country’s total automotive exports for that year. The proposed incentives aim to safeguard the competitiveness of South African vehicles in the U.S. market and protect the local automotive industry from the adverse effects of the tariffs.

The National Association of Automobile Manufacturers of South Africa (NAAMSA) has added that multinational automakers with production bases in South Africa, such as BMW, Ford Motor, Isuzu, Mercedes-Benz, Nissan, and Toyota, will face significant impacts on their vehicle production for global markets, including the United States.

In addition, in March of this year, the South African Treasury announced a special allocation of 1 billion rand to support local new energy vehicle and battery production projects, while also promoting the development of related manufacturing initiatives.

Furthermore, in January, it was reported that South African President Cyril Ramaphosa had signed a law providing tax incentives for the production of new energy vehicles. The law plans to offer a 150% tax deduction for companies investing in the production of electric and hydrogen-powered vehicles in South Africa. As a result, Chinese automakers are now planning to invest in South Africa’s automotive industry.