South Africa Proposes Raising Tariffs on Vehicle Imports From China and India to 50% to Protect Local Auto Industry

South Africa is considering imposing tariffs of up to 50% on imported complete vehicles from China and India. This move aims to counter the recent surge in low-priced vehicle imports, which has impacted the domestic automotive manufacturing industry. This initiative is part of an ongoing internal policy review by South Africa's Department of Trade, Industry and Competition (DTIC), intended to curb the growing import volumes and alleviate the pressure they exert on local production capacity and manufacturers' profit margins.

One of the options currently being evaluated is to adjust the country's tariff schedule to align with the bound tariff rates committed by South Africa under the World Trade Organization (WTO) framework. Ayabonga Cawe, a member of the International Trade Administration Commission (ITAC) of South Africa, stated this to the legislature in Cape Town on Tuesday. Cawe noted, "For fully assembled passenger vehicles, our bound rate under the WTO is 50%, while the currently applied rate is around 25%; in the case of parts, there is room for an upward adjustment of between 10% and 12% depending on the country of origin."

Data shows that in 2024, vehicles imported from China accounted for 53% of South Africa's total vehicle imports, while those from India accounted for 22%. Over the past four years, the number of vehicles imported from China has grown by 368%, and imports from India have increased by 135%. This growth is primarily concentrated in the entry-level passenger car segment, where imported products are intensifying market competition and squeezing the profit margins of local manufacturers with their price advantage.

Despite China, India, and South Africa being members of BRICS, an organization that advocates for increased trade cooperation among its members, the rapid expansion of vehicle imports has raised widespread concerns within South Africa's domestic automotive industry. During this policy review, the DTIC will also consult with the South African National Treasury on accompanying fiscal measures, which may include imposing a consumption tax on new luxury models and re-examining the current rebate incentive scheme for the automotive sector.