According to a recent article by Business Day, the United States has rejected South Africa’s application for exemption from President Donald Trump’s import duties on steel and aluminium.
This puts approximately 7 500 jobs under threat.
Earlier this week, Trump “signed proclamations granting permanent exemptions to a select number of countries and extended by one month the steel and aluminium tariff duty exemptions for some”, according to Business Day. Unfortunatley, South Africa was not among them.
Exempted countries will be less competitive, forcing South African steel and aluminium products out of the US market.
However, these duties are being implemented in a way that contravenes some fundamental World Trade Organisation principles.
The Department of Trade and Industry has urged domestic exporters to ask their US buyers to consider applying for product exemption under a process conducted by the US commerce department and said that it would continue to consult the industry.
Sidwell Medupe, a DTI spokesperson, says that the “measures were unfair because SA’s exports of aluminium and steel products to the US were not that significant”.
“South Africa is not a cause of any national security concerns in the US nor a threat to US industry interests and is not the cause of the global steel glut. Instead, South Africa finds itself as collateral damage in the trade war of key global economies,” Medupe said.
On March 8, Trump signed a proclamation imposing a 10% ad valorem tariff on imports of aluminium articles and a 25% ad valorem tariff on imports of steel articles. The proclamation followed reports from the US secretary of commerce that imports of these products threatened to impair US national security.
Countries excluded from the duties include Canada, Mexico, the EU, South Korea, Australia, Argentina and Brazil.
SA unsuccessfully argued its case for an exemption, saying that the duties would affect both jobs and productive capacity in a sector already suffering from global steel overcapacity.
It offered to restrict exports to a quota based on the level of exports in 2017.
SA assured the US that it had stringent customs-control measures so there was no risk of circumvention or transhipment of steel from third countries to the US. It also emphasised that its exports of aluminium products represented about 1.6% of total annual US aluminium imports.
According to the US Census Bureau data, in 2017 the US imported a total of 33.4-million tonnes of steel, of which imports from SA were about 330,000 tonnes, or 0.98% of total US imports and 0.3% of total US steel demand of 107-million tonnes. The 330,000 tonnes exported from SA represents 5% of South African production, equating to about 7,500 jobs in the steel supply chain.
Medupe said that some of the exempted countries were the biggest exporters of steel and aluminium to the US. For steel imports, the exempted countries collectively accounted for 58% of total steel imports into the US in 2017 and 49% of total aluminium imports.
Trade expert Peter Draper, the MD of Tutwa Consulting, has previously indicated to Business Day that he believes the US would use the hikes as leverage to pry open the local market for US firms.
It could do this by triggering a review of SA’s trade preferences under the Africa Growth and Opportunity Act.