The 30% tariff on South African exports to the US is expected to have a significant and multidimensional impact on the South African metals and engineering sector, Steel and Engineering Industries Federation of Southern Africa (Seifsa) CEO Tafadzwa Chibanguza has warned.

“While not all companies are directly affected, the broader ecosystem, including suppliers, customers and competitors, face serious disruption,” he said in a statement on August 4.

On July 7, the US confirmed a 30% import tariff on South African exports, effective August 1. This development prompted widespread concern within the South African metals and engineering sector, which relies on the US for 8% of its total output.

The US has since said the 30% tariffs will take effect from August 7.

To assess the likely implications, Seifsa conducted a snap survey across its membership base. The report that resulted synthesised both the quantitative and qualitative feedback received, identifying direct and indirect impacts on companies, market alternatives being considered and notable initial perspectives emerging from the sector.

Out of the 126 member companies that responded to the survey, 33% said they would directly suffer from revenue and job losses.

“A significant number of respondents reported that the new tariffs would have severe and immediate consequences for their businesses. Many companies anticipate a dramatic drop in sales, with some stating that the US accounts for up to 20% of their turnover. The expected revenue declines are estimated at 10% to 20%,” Chibanguza said. 

He noted that several respondents had indicated that if the tariffs were to persist, they would be forced to reduce their workforce or even close operations.

In addition, some companies have reportedly had to reconsider or halt planned investments.

Chibanguza highlighted one notable case involving the redirection of equipment and production intended for the US to another subsidiary, leading to the effective shutdown of a new South African facility. 

Several manufacturers also expressed concerns about production uncertainty, especially where their product offerings were specifically tailored to US market demand.

Meanwhile, 23.8% of respondents believed the supply chain would suffer indirect impacts, thereby affecting a larger swath of the economy.

Exploring alternative markets was seen as a necessity by 15.9% of the respondents.

“While some companies acknowledged the existence of alternative markets, most noted that these are limited and already under pressure. Asian suppliers, particularly from China, are aggressively pricing into African markets, making it difficult to shift exports regionally.

“Furthermore, protectionist policies in other countries have made export diversification even more challenging,” Chibanguza said.

He noted that several companies had reported a trade diversion effect, whereby redirected global supply chains have led to increased competition from lower-priced imports in key third markets, which is eroding South African companies’ competitiveness.

“Even companies not directly exporting to the US are bracing for spillover effects,” he said. 

Chibanguza noted that suppliers and exporters were anticipating reduced orders, while increased global steel prices and constrained access to key materials were expected to raise input costs.

Respondents also flagged broader macroeconomic concerns, including rising inflation, reduced GDP and worsening unemployment. 

About 14.3% said they were uncertain of the possible impacts, while only 12.7% of the respondents felt as though they would be unaffected by the tariffs.

“These figures show that while not every respondent is directly exposed to the tariff, a majority anticipate either direct or cascading economic consequences, demonstrating the interconnectedness of the metals and engineering ecosystem,” Chibanguza noted.

He added that there was a general sense of uncertainty across the industry, with companies citing delayed orders, client hesitation and investor risk aversion as immediate consequences.

“While some companies reported being unaffected, others described the tariffs as an existential threat, underscoring the uneven exposure within the sector,” Chibanguza said.

He pointed out that there had been multiple calls for government intervention through export diversification incentives, financial support and stronger trade diplomacy.

Some respondents also criticised broader industrial policy frameworks, arguing that structural issues such as high labour costs and electricity tariffs had already undermined competitiveness before the tariffs were imposed.

“One respondent also highlighted the adverse impact on emerging green technology, noting that their unique energy-efficient product, which had shown great promise, is now facing reduced demand owing to the tariff-related uncertainty,” Chibanguza said.