AGOA extension but Section 232 Duty remains a major hurdle
Author: naamsa | The Automotive Business Council
The extension of the African Growth and Opportunity Act (AGOA) through to 31 December 2028 provides important strategic breathing room for South Africa and preserves a framework for future trade engagement with the United States. However, for the automotive industry, the single largest beneficiary of AGOA over the past quarter century, the extension does not materially alter current trading conditions.
The Section 232 tariff of 25% on imported vehicles and automotive components continues to nullify the preferential market access benefits that South African vehicle manufacturers historically enjoyed under AGOA. As a result, while the extension provides valuable strategic and policy continuity, it does not restore economic certainty, export competitiveness or the full commercial benefits previously derived from the programme by the South African automotive industry.
The duty saving of 2,5% on passenger car exports to the US under the African Growth and Opportunity Act represented a gamechanger for the South African motor industry for 25 years. Since enacted in 2000, this trade arrangement provided impetus for the domestic automotive industry’s vehicle export drive to the US, which increased from 853 units in 2000 to 14 873 units in 2001, under the first year of AGOA, a massive increase of 1 643,6%. The US subsequently became South Africa’s top export destination for vehicles from 2008 to 2013 and, with the exception of 2019, consistently remained the domestic automotive industry’s second largest trading partner from 2011 to 2024.
However, since 2025, US protectionist policies, and in particular the Section 232 tariff of 25% on vehicles imposed on 3 April 2025 and on components on 3 May 2025, nullified the AGOA concession to the domestic automotive industry as the major beneficiary under AGOA. Consequently, South African vehicle exports to the US decreased by 83,2%, from 24,682 units in 2024 to 4,136 units in 2025, and by a further 36,0% from 2,875 units for the first half in 2024 compared to 1,840 units for the first half of 2025. Vehicle exports to Canada as well as Mexico increased as potential new opportunities in 2026, but not enough to offset the loss of US vehicle exports. Overall, for the first half of 2025 compared to the corresponding period in 2024, light vehicle exports were down by 8,1%.
The economic implications extend far beyond trade statistics. South Africa’s automotive industry is a major contributor to manufacturing output, at 23,8% for the year 2025, as well as employment, export earnings and industrial investment. South Africa’s trade agreements underpin production volumes that enable domestic manufacturers to achieve economies of scale, support supplier localisation and sustain long-term investment decisions. The continuation of Section 232 tariffs therefore continues to put pressure on South Africa’s exports to the US market, consequently remaining a material risk to future export growth and industrial expansion opportunities.
“The extension of AGOA is an important and welcome development, but for South Africa’s automotive industry, market access on paper must translate into commercially competitive access in practice. Section 232 continues to constrain that opportunity. Our priority must therefore be to secure a durable and mutually beneficial trade arrangement with the United States that supports production, protects investment, sustains jobs and enables South Africa to compete in global automotive markets,” said Shinny GOBIYEZA, Interim Chief Executive Officer and Chief Operations Officer of naamsa.
For context, AGOA is a non-reciprocal preferential trade programme that the US offers to 49 sub-Saharan African eligible countries. The Act is an extension of the US Generalised System of Preferences (GSP), which is a preferential tariff system that reduces customs duties and other tariffs associated with exporting goods from eligible developing countries to the US. Notably, the newly added “AGOA products” included items such as motor vehicles and selected additional automotive components. The rule of origin requirement for a vehicle under AGOA is 35% local content.
Initially, AGOA was set to expire in 2008, but the US Congress passed the AGOA Acceleration Act of 2004, which extended the legislation to 2015. In 2015, Congress passed legislation modernising and extending the programme to 2025.
AGOA expired on 30 September 2025 but, as of February 2026, the US had approved a one-year extension of the Act until 31 December 2026, with retroactive effect to 30 September 2025. On 8 August 2026, the US Senate extended AGOA through to 31 December 2028, aligned with the current US presidential term. The two-year extension preserves duty-free access to the US for the current 32 eligible sub- Saharan African countries, including South Africa, but the bill still requires final concurrence in the House of Representatives and the US President’s signature.
In 2025, despite the imposition of the Section 232 tariff on automotives, the US comprised the South African automotive industry’s 4th largest export destination with an export value of R20 426,4 billion, 5th largest country of origin with an import value of R23 552,5 billion, and overall, the domestic automotive industry’s 4th largest trading partner.
Under AGOA, substantial two-way automotive trade has taken place between South Africa and the US since its inception. South African automotive exports to the US increased by 336,7% between 2001 and 2025, while automotive imports from the US increased by 868,2%, proportionally much more than exports over the same period.
The adoption of automotive rules of origin in February 2026 also creates important opportunities under the AfCFTA to extend automotive production and value chains across the region and improve the industry’s global competitiveness. Regional market demand remains one of the key pillars of SAAM 2035 and, with 85,1% of vehicle and component exports in 2025 destined for SADC, significant opportunities exist to deepen regional integration, expand duty-free market access and diversify South Africa’s automotive export base. South Africa is already playing an instrumental role in the Auto Pact under the AfCFTA framework.
The benefits stemming from AGOA for South Africa over the past 25 years have been much broader than mere duty- and quota-free access into the US. The programme also stimulated opportunities for a chain of collaborative arrangements with manufacturing companies from sub-Saharan African countries to access the US duty free.
Although the two-year AGOA extension presents important strategic breathing room, it does not yet provide economic certainty for the domestic automotive industry, as the full benefits of preferential market access into the US cannot be realised while the Section 232 tariff impediments remain.
South Africa continues to pursue a more durable and mutually beneficial long-term trade relationship with the US, while continuing to diversify its automotive export markets.
The Section 232 tariff of 25% is an automotive-specific tariff measure. While the “Liberation Day” tariff declaration of a 30% duty imposed on South Africa in 2025 and the recent 12,5% tariff on most South African imports into the US under Section 301 of the US Trade Act of 1974, linked to a seemingly unjustified trade enforcement action regarding forced-labour import bans, are separate protectionist policies and not applicable to the domestic automotive industry, the South African government continues to negotiate a comprehensive trade offer with the US to mitigate economic impacts and seek a mutually beneficial, negotiated settlement, also including vehicles.
No agreement has been reached yet, but negotiations in this regard continue as the US remains the largest economy in the world and a significant trading partner for South Africa and its automotive industry.
