AGOA Exit Threatens South Africa's Car Exports; Canada Faces Same Squeeze

South Africa's automotive exports to the US fell 29% to R20.43 billion ($1.14 billion) in 2025, and Washington's plan to eject the country from the African Growth and Opportunity Act (AGOA) threatens to cut deeper. Africa's largest vehicle producer — and AGOA's biggest user — is already bleeding from the 25% tariffs the US imposed on vehicles and components in 2025. Now it faces losing preferential access to the world's largest economy altogether.

The numbers behind the squeeze are stark. NAACAM, the components industry body, counts 15 company closures and more than 7,500 gross job losses across the parts sector over three years. Full removal from AGOA would add duties of roughly 2.5% on affected passenger vehicles. The direct hit matters less than the competitive one. Japan, the UK, the EU and South Korea have all secured better tariff deals with Washington, which erodes South Africa's pricing position in its third-largest market.

"The exclusion from AGOA is indeed a negative for us," President Cyril Ramaphosa acknowledged in a televised address. "Diversification has now become the order of the day."

Can Europe and China plug the hole?

What does this change for exporters? Not much relief, on the evidence so far. Europe already carries the load: South African automotive exports to the EU and UK reached R182.8 billion ($10 billion) in 2025, or 62.8% of total automotive export value, against the $1.14 billion sent to the US. Pretoria is still negotiating with Washington, but the direction of travel points away from dependence on American buyers.

Canada has travelled the same road since April 2025, when Washington hit Canadian-built vehicles with tariffs. More than 90% of Canadian-made vehicles go to the US. That leaves an industry supporting 125,000 direct jobs — and over 500,000 across the wider sector — exposed to a single market.

The damage has already reached the plant floor. In January 2026, General Motors said it would cut 500 jobs at its Oshawa plant, with a potential knock-on for 1,200 supply chain workers. Stellantis shifted planned Jeep production to the US, leaving 3,000 workers at Brampton facing uncertainty.

Like Ramaphosa, Prime Minister Mark Carney is pushing diversification, and China features prominently. In January 2026, Ottawa secured an agreement allowing 49,000 Chinese electric vehicles into Canada annually, aimed at attracting investment and building domestic manufacturing.

"For Canada to build its own competitive EV sector, we will need to learn from innovative partners, access their supply chains, and increase local demand," Carney said during a visit to Beijing.

Why the arithmetic doesn't work

The trade flows explain the scepticism. In 2025, Canada exported $47.36 billion in automotive products to the US — and just $322.86 million to China. China is a rounding error where the US is the balance sheet. South Africa's $1.14 billion in US automotive exports has no obvious Chinese substitute either.

There's a second problem. Beijing competes in both countries' domestic markets. Cheaper Chinese EVs could undercut local manufacturers and put more jobs at risk — the very jobs the diversification strategy is meant to protect.

"China now has a foothold in the Canadian market and will use it to their full advantage at the expense of Canadian workers," Ontario Premier Doug Ford warned.

What comes next

Both governments are running on two tracks: keep talking to Washington while hunting for alternative demand. Canada holds preferential EU access through its trade agreement with Brussels, but Europe remains a far smaller automotive destination than the US. South Africa's EU and UK volumes dwarf its American sales already, yet those lanes are largely saturated rather than expandable at short notice.

With AGOA termination pencilled in, South Africa's component sector — already down 15 firms and 7,500 jobs — looks exposed first, since parts makers sit closest to thin margins. Canadian suppliers face a similar squeeze as OEMs realign production toward the US tariff wall. Both capitals will keep negotiating, but with Japan, Korea and the UK holding better Washington deals, expect further volume shifts toward Europe and Asia through 2026 and 2027.