SA’s downstream steel industry is facing significant uncertainty as proposed increases to 460 steel tariff codes could affect more than 16 000 traders and imports valued at R51,5 billion (US$2.9 billion). The International Trade Administration Commission (Itac) has outlined plans that may see tariffs rise to their World Trade Organization (WTO) bound rates of between 10% and 30%, raising concerns over job losses and higher production costs.
According to trade consultancy XA Global Trade Advisors, just 85 firms account for roughly half of the affected imports, meaning a small group of traders will bear the brunt of the increases. More than 600 steel products are potentially impacted, with the highest changes affecting Chapter 73 tariff codes, which cover tubes and pipes, and Chapter 82 items, such as tools and implements, which could now face tariffs of up to 20%.
Itac argues that the planned measures are intended to shield local producers from the influx of cheap imports, particularly from Asia. Earlier this year, the commission launched the largest tariff review in its 22-year history after ArcelorMittal South Africa (Amsa) threatened to close its Newcastle and Vereeniging mills, citing a surge in low-cost steel imports that made operations unprofitable.
“The proposed increases aim to level the playing field for domestic manufacturers who have been under intense pressure from global overproduction,” an Itac spokesperson said. “These measures are designed to ensure the sustainability of local steel production and safeguard jobs in the sector.”
However, the National Employers Association of South Africa (Neasa) has sharply criticised the approach, describing it as a “blanket solution” that fails to distinguish between finished products flooding the market and essential raw materials needed by local fabricators.
“The problem with Itac’s approach is that it doesn’t differentiate between cheap finished products and affordable raw steel, which many manufacturers require but cannot produce locally,” Neasa said in a statement. While Itac has proposed rebate systems for products unavailable in South Africa, Neasa argues that the criteria are vague, leaving too much discretion with the regulator and making import permits necessary for many goods.
David MacKay, CEO of XA Global Trade Advisors, warned that the global steel surplus, particularly from China’s overproduction, is unlikely to ease in the near term. “Even with R2 billion in government support and strong tariff protection, Amsa continues to operate under significant pressure,” he said. “Subsidised mini-mills that rely on scrap metal add further to the oversupply challenge.”
Proposed Steel Tariff Hikes Threaten Jobs, Hit SA Traders and Manufacturers
MacKay also cautioned that the proposed tariffs, combined with potential export duties on iron ore and coal, could force miners to offer steep discounts locally before receiving export permits. This comes as South Africa’s mining sector continues to struggle with Transnet’s ageing rail and port infrastructure, which already hampers export efficiency.
The proposed tariff changes build on existing measures such as the preferential pricing system for scrap steel, which requires dealers to sell locally at a 30% discount compared to global prices. Economists warn that downstream industries, which employ around 90% of the steel sector workforce, will feel the most severe impact. About 77% of the new tariffs will target intermediate goods, 14% capital goods, and only 9% finished products.
Critics argue that while the tariffs could generate up to R6 billion in new duties, they will also drive up steel prices, reduce consumption, and threaten jobs across steel fabrication and manufacturing sectors. Smaller fabricators, who rely on imported raw steel or specialised materials unavailable locally, may struggle to absorb the additional costs, potentially leading to layoffs or closures.
Industry stakeholders are now calling for a balanced approach that protects local production while ensuring that downstream manufacturers remain competitive. “If the tariffs are too broad, they could have the opposite effect, pushing up costs for South African manufacturers and making products less competitive both domestically and internationally,” said an industry analyst.
As the debate continues, the South African steel industry stands at a crossroads. The government and Itac face the challenge of supporting local producers without crippling downstream industries that form the backbone of employment and economic activity in the sector. The outcome of these proposed tariff increases will likely define the trajectory of the country’s steel sector and the livelihoods of thousands of workers in the months and years to come.
Source- Bulawayo24
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