SA's vital marine manufacturing industry faces existential threat from new US tariffs

Daily Maverick

2 days ago

Almost $10-billion worth of South African goods exported annually to the United States are now subject to a 30% 'reciprocal' tariff. This move not only threatens production and job losses in local manufacturing and agriculture, but also affects the maritime sector as the provider of transport and logistics that moves these locally produced goods and raw materials to export markets.
The overall impact will reshape South Africa's maritime trade flows as the country's goods become less competitive in the US, especially compared with suppliers in countries with lower tariffs.
The new tariffs mainly target manufactured goods, including vehicles and components, machinery and equipment, and leisure craft, which have higher value added, while key mining commodities are exempt — effectively derailing South Africa's export-focused industrial growth path.
This extends to the marine manufacturing sector, as South Africa's boat and yacht builders that export almost a third of their production to the US — their most important market that was previously duty free under the African Growth and Opportunity Act (Agoa) — are now also subject to the 30% tariff.
Jobs and future investment at risk
This has an immediate impact on the competitiveness of the South African marine manufacturing sector, putting jobs and future investment at risk in a growing, highly export-oriented sector that is considered one of the keys to unlocking SA's maritime economic potential.
A near-collapse of South African vehicle exports to the US since the tariff hikes were first announced in April, with an 87% drop over three months, compared with Q2: 2024, is among the first signals of the impact on manufacturing production and exports.
Reduced exports mean lower shipping volumes from South African ports to the US, affecting the capacity utilisation and revenues of the container and vehicle shipping lines that serve these routes. The only shipping line currently providing direct sailings from SA ports to the US east coast (Mediterranean Shipping Company, MSC) told Freight News that it would be maintaining its dedicated SA-US service of four vessels currently in weekly rotation, despite the potential impact of the tariffs on trade volumes.
Logic, however, suggests that the number of vessels and/or frequency of sailings of any shipping line on a particular route are likely to be reduced if these are not sailing at capacity as the service becomes less profitable.
Logistics bottlenecks and congestion at South African ports, a situation now slowly improving, have resulted in several shipping lines reducing their local ports of call in recent years, or excluding SA's ports altogether.
Reduced export volumes as a result of the US tariffs may make South Africa an even less attractive destination to service, further reducing access to shipping capacity, and thus limiting the ability of SA manufacturers and other producers to secure new export business.
For exporters, the challenge is not only producing the right goods at the right price, but also delivering them on time at a landed price not excessively inflated by import duties.
While the impact of the US tariffs must accelerate efforts to seek new export markets, securing new business and complying with myriad associated regulations is not an overnight process; particularly in a global trading environment that now encourages isolationism and protectionism following the lead of the US.
When those new markets are secured, the capacity to ship to them needs to be in place — in other words, we cannot afford to lose the confidence of the global shipping industry nor the capacity of our ports to handle cargo.
Declining exports would lead to reduced throughput at South African ports and reduced capacity utilisation, which affects their global rankings and ability to attract shipping lines and generate revenue through port dues.
Ports need to be busy, moving volumes at scale, which facilitates imports and competitiveness, enabling cost-effective exports and access for South African producers to global markets.
Increased tariffs and trade barriers cause delays, cancellations and disruptions in maritime shipments, leading to higher insurance claims and logistical challenges for cargo insurers and shipping companies.
All of these challenges in reduced volumes of trade and reduced export capacity would in turn affect employment in our ports, in the maritime logistics and transport value chain, and in the surrounding network of suppliers and service providers to the maritime sector.
Marine manufacturing
The SA boat-building industry, primarily focused on leisure craft, has shown impressive growth of over 20% annually in the years following Covid-19. South Africa is the world's second largest producer of catamarans, after France, with more than 90% of our leisure craft exported — and 29% of production exported to the US, which is SA's largest market valued at approximately R1.6-billion in 2024.
These exports to the US were duty free under Agoa, which has now been nullified by the imposition of the 30% reciprocal tariff, placing a R3-billion industry that supports up to 10,000 jobs, under existential threat.
The sector is characterised by high input and operating costs. Given that aluminium and steel are critical components and inputs in the construction of boats and superyachts, the imposition of the additional 50% tariff on these materials will further harm the sector's competitiveness in the US market.
High-value exports stifled
The US tariffs are reshaping South Africa's economy and maritime trade by stifling high-value exports, increasing costs for importers and redirecting cargo flows towards exempted raw materials — negating the drive for local beneficiation of raw materials to shift the proportion of exports to higher value finished goods.
The US is South Africa's third-largest overall trading partner, after the European Union and China. However, the EU and the US are arguably more important markets than China, as they are destinations for diversified, high value-added manufactured goods, supporting local employment, while exports to China and other BRICS countries are largely low margin, unbeneficiated raw materials and a small basket of agricultural products.
Strategies to support local manufacturing and pursue alternative markets, including boosting intra-Africa trade through the African Continental Free Trade Area (AfCFTA) and leveraging BRICS membership to unlock higher value trade, must incorporate measures to incentivise the local processing of minerals and other resources.
While the government continues negotiations with the US towards a mutually beneficial trade deal, the announcement earlier this week by the ministers of Trade, Industry and Competition, and International Relations and Cooperation, of an Economic Response Package to assist businesses affected by the tariffs is most welcome.
We trust that the Department of Trade, Industry and Competition's newly formed Export Support Desk will support not only businesses in manufacturing in finding and accessing new markets, but also those in maritime transport and logistics sectors adapting to altered volumes and trade flows.
Businesses seeking to enter new markets will also need support in ensuring that shipping routes and capacity are available to service new destinations, and meeting logistics and policy requirements of those new markets. DM