SA Throws a BRIC at Chinese and Indian Vehicles

South Africa is considering raising tariffs on Chinese and Indian vehicles to 50%.

The International Trade Administration Commission (ITAC), a government body which aims to ensure fair trade through effective administration of trade instruments, has proposed a significant hike in tariffs on imported vehicles from China and India, which would see the current 25% tariff rise to 50%. The proposal also includes increasing tariffs on vehicle components from these countries from around 20% to 30%.

This move is striking, particularly because China and India are key partners in BRICS, a group of major emerging economies, and South Africa has long worked to foster economic relations with countries outside the West. Yet the decision to impose higher tariffs on vehicles from these countries appears contradictory. These tariffs would help protect vehicles that are manufactured and sold in South Africa, with the majority of these vehicle manufacturers being from the West.

According to Ayabonga Cawe, an ITAC commissioner, "bound rates" for completely built-up passenger vehicles are set at 50%, meaning the government has room to raise tariffs on both vehicles and their components through existing trade agreements.

The rise in tariffs would make cars from China and India, which already offer cheaper alternatives to locally manufactured vehicles, significantly more expensive for South African consumers.

This would hit South Africans hard as currently more than 60% of the country's light motor vehicles are imported, with 57% of those imports being from India and 17% from China, according to NAAMSA, a motoring industry lobby group.

Tariffs on imported Indian and Chinese vehicles would mean South African consumers, already struggling with high car prices, are effectively subsidising European and American manufacturers in South Africa, which are already produce more expensive vehicles, generally speaking.