Alarm bells are once again sounding in the Eastern Cape after US President Donald Trump’s latest tariff decision — a move that raised fresh concerns about the impact on Mercedes-Benz SA.
Eastern Cape finance MEC Mlungisi Mvoko has warned of massive job losses should Mercedes-Benz SA close its East London factory.
We’re anticipating that Mercedes-Benz might leave SA
— Eastern Cape finance MEC Mlungisi Mvoko
“We’re anticipating that Mercedes-Benz might leave SA,” Mvoko told parliament’s finance committee meeting on Tuesday.
He said a delegation had visited the company’s headquarters in Germany, where discussions were held to try to salvage the situation.
On Monday, Trump announced that he would subject SA to 30% tariffs from August 1.
He warned earlier in the day that he would impose a 10% tariff on Brics nations.
Pretoria is seeking to use the coming weeks to lobby Washington for changes to Trump’s planned tariff hike on the US’s SA imports.
Though the Trump administration has announced a blanket 30% tariff on SA exports, excluding select sector-specific duties, Pretoria remains hopeful that there is still diplomatic space to negotiate a reprieve.
The move could severely undercut the competitiveness of SA goods in the US market, dealing a blow to key export industries.
The effect is expected to be felt first by vehicle manufacturers with export ties to the US, with knock-on effects on component exports in the Eastern Cape.
Mvoko said the province was already battling high unemployment.
More than 80,000 workers lost their jobs in the Eastern Cape in the first three months of 2025 and the unemployment rate reach a staggering 39.3% in the province.
Mvoko said the 30% tariff was a major setback for the province, especially given that just two days earlier, the department of trade, industry and competition had engaged in talks with Mercedes-Benz SA.
“You cannot imagine East London without Mercedes-Benz SA,” he said.
“Mercedes-Benz SA exports almost 90% of their cars to the US, and in our interaction with Mercedes-Benz SA, given these tariffs, it is going to be very difficult.”
After the meeting, Mvoko said the government remained hopeful the situation would not escalate to that point, and talks with MBSA were still ongoing.
Mercedes-Benz SA halted production for an extended period due to falling global demand for its flagship C-Class sedan.
The plant usually shuts down annually in August for maintenance and retooling.
However, Mercedes-Benz SA confirmed that the production pause planned for 2025 had been extended as part of wider efforts to adjust overall output volumes.
“If Mercedes-Benz [leaves] the East London SEZ, it might be gone because half of the companies established there are suppliers to Mercedes-Benz,” Mvoko said.
He warned that a shutdown by Mercedes-Benz SA would deal a significant blow to the provincial economy, especially in light of Goodyear’s recent announcement to close its Kariega plant, a move that could result in the loss of 907 jobs.
“This is the second manufacturing company we have lost, as we also lost Bridgestone in Nelson Mandela Bay,” Mvoko said.
“Things are not good with us.
“With our high unemployment rate, this is going to contribute even more.”
Mercedes-Benz SA corporate affairs manager Thato Mntambo said the East London plant was focused on the production of the C-Class.
“Please understand that, in general, we do not comment on speculation about future product portfolio and production planning process.
“We are continuously assessing the impact of the introduced US tariffs on the automotive industry.”
SA investors are hopeful that Trump may withdraw the tariffs in the coming weeks or postpone the deadline, as done with his “liberation day” levies.
The US president said in his announcement on Monday that negotiations would remain open ahead of the deadline.
Reacting to the news of the tariffs, Border-Kei Chamber of Business executive director Lizelle Maurice said: “A 30% tariff is not good for anyone, particularly as Mercedes-Benz supplies the US market. It is devastating news.
“It will have a ripple effect across all sectors.”
Maurice said businesses needed to think outside the box and to find new ideas and methods to stay afloat.
Black Business Forum president Luthando Bara said the proposed tariffs were a serious threat.
“For the Eastern Cape, the 30% tariff is more than just an economic policy, it is a direct threat to the social and developmental fabric of the province.
“While the immediate impact will be felt in key sectors like automotive manufacturing and agriculture, the ripple effects will run much deeper.
“In a province already battling high unemployment and under-development, this added pressure could tip many communities into deeper economic distress.
“The Eastern Cape cannot afford to absorb this blow without a deliberate response from the government and industry,” Bara said.
Nelson Mandela Bay Business Chamber CEO Denise van Huyssteen said Nelson Mandela Bay would be disproportionately affected due to the city’s high reliance on the automotive and agriculture sectors.
“Our local economy is highly reliant on the automotive industry and employs almost half of the country’s workforce in this sector.
“We are particularly concerned about the potential knock-on effect reduced vehicle assembly volumes of affected OEMs who export to the US may have on the automotive components supply chain and surrounding ecosystem,” Van Huyssteen said.
XA Global Trade Advisors CEO Donald MacKay said the tariffs imposed by the US might be a result of Trump trying to penalise SA.
That was despite previous diplomatic efforts by SA to normalise the relations.
“The trade relations with the US are null and void. They are still open to offers ... [Trump] is using this to create some sort of urgency,” Mackay said.
— The Herald and Daily Dispatch with additional reporting by Business Day
Daily Dispatch
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.