On Tuesday, US President Donald Trump approved a one-year extension of the African Growth and Opportunity Act (AGOA), restoring duty-free access to the American market for exports from 33 African countries.
The renewal, coming after the agreement’s lapse on September 30, 2025, offers South Africa, AGOA’s largest beneficiary, critical relief. Its automotive manufacturing industry, which sits at the intersection of e-commerce logistics, e-hailing fleets, and electric vehicle (EV) supply chains, was among the sectors most severely impacted by the expiration.
In 2024, South Africa exported more than $14.5 billion worth of goods to the U.S., with roughly $4 billion qualifying for AGOA’s duty-free preferences. Vehicles and auto components accounted for more than half of that value. In 2024, South Africa’s auto sector generated over $1.6 billion in export revenue, including passenger and light commercial vehicles.
When AGOA expired, South Africa’s auto sector was already feeling the pressure of 2.5% tariffs on passenger cars and up to 25% on light trucks. Without AGOA’s duty‑free access, those added costs wiped out profit margins in the price‑sensitive American market, making South African‑built vehicles uncompetitive almost instantly.
The U.S. remains a critical export demand for South Africa. It is the world’s second-largest e-commerce market, projected to reach $1.38 trillion by 2026, and a fast-growing e-hailing economy as younger consumers shift away from car ownership toward on-demand mobility.
The U.S. ride-hailing market was valued at about $32.6 billion in 2025 and is part of a global sector expected to hit nearly $190 billion by 2026, markets where South Africa’s exports of passenger and light commercial vehicles still play a role.
South Africa’s auto industry is retooling for the EV transition. Local plants are already producing internationally competitive new-energy vehicles (NEVs), including plug-in hybrid versions of the BMW X3, Ford Ranger, and Mercedes-Benz C-Class, primarily for right-hand-drive markets in Europe and the UK.
Even if today’s NEV exports are not U.S.-bound, AGOA remains strategically important. The U.S. still offers scale, learning effects, and investment relevance, critical as the country pivots toward EVs and plug-in hybrids.
AGOA’s renewal to ease the pressure on auto jobs
South Africa’s auto sector directly employs more than 110,000 people in vehicle assembly and component manufacturing and supports an estimated 500,000 additional jobs across logistics, supply chains, and related services. Export-oriented plants serving the U.S. market have been particularly exposed to policy uncertainty, making AGOA’s extension a stabilising factor for investment and long-term planning.
AGOA’s uncertainty also raised broader geopolitical questions. “While AGOA is important, as long as the U.S. continues its economic wars, one result is a global trade disruption that includes massive Chinese dumping of goods, below the cost of production, that are no longer gaining entry to the U.S. market,” said political economist Patrick Bond.
He said the prolonged uncertainty around AGOA risked weakening U.S. diplomacy and accelerating Africa’s shift toward alternative trade partners.
In June 2025, Beijing announced it would remove tariffs on imports from 53 African countries, effectively widening its trade corridor across the continent.
The AGOA extension comes as South Africa works with the United States on a Reciprocal Tariffs Agreement aimed at cutting the 30% duty the U.S. currently places on South African exports.
The one-year AGOA extension, for now, gives South Africa’s industrial base breathing room as it navigates global trade realignments and intensifies competition for market access.
