AMSA Import Duties and Tariffs: Government's attempt to transform the Steel Industry - soviet style.

AMSA

IMPORT DUTIES AND TARIFFS

GOVERNMENT’S ATTEMPT TO TRANSFORM THE STEEL INDUSTRY

– SOVIET STYLE

by Gerhard Papenfus

The South African government, by virtue of the International Trade and Administration Commission of South Africa (ITAC), in an attempt to rescue the failing steel monopoly AMSA, is engaged in a systematic process of orchestrating the demise of the entire steel industry. Their ‘strategy’ is to impose import duties and trade tariffs, which, as the economist JP Landman recently remarked, "... is not industrial policy; it is trying to hide from the realities of the world."

To highlight just a few problematic duties:

• an ad valorem duty of 10% currently applies to certain structural steel, with a further 53% anti-dumping duty in respect of imports from China;

• an ad valorem duty of 10% currently applies to flat steel, with a further 13% safeguard duty under consideration; and

• in respect of galvanised steel, an ad valorem duty of 10% currently applies, with a further 60% safeguard duty and a 53% anti-dumping duty currently under consideration. 

As if this is not enough, ITAC recently notified the steel industry that they are considering the most sweeping review of duties covering the entire industry. This review will cover 609 tariff codes and will even go as far as considering introducing of what amounts to an import ban, unless a potential importer can obtain a permit, which will be subject to the sole discretion of government, who will probably consult AMSA in deciding whether or not such permit will be issued.

An article by Ivo Vegter, under the heading ‘Retaliatory tariffs are bad policy’, was published on 1 April 2025 in the Daily Friend. In this article, Vegter made out such compelling arguments as to the contra-productive nature of tariffs, that it bears repeating:

• tariffs tend to raise prices and reduce employment;

• it does more harm than good, and while tariffs do impact exporters in target countries, the bulk of their economic harm is inflicted on domestic customers;

• tariffs routinely fail to achieve their stated goals, such as strengthening domestic industries, increasing domestic production, and creating more domestic jobs; and 

• it universally raises consumer prices, starve industry of competitively priced imports, reduce the global competitiveness and efficiency of domestic companies, reward smuggling and corruption, and invites foreign retaliation. 

We have seen this scenario, or at least many elements thereof playing out in South Africa. All the protectionist duties implemented since 2015, following the visit by Lakshmi Mittal to Jacob Zuma, has done nothing to save AMSA. AMSA is still struggling, even more now than 10 years prior, notwithstanding all the duties and billions in aid. All that has changed is the size of the steel industry; it is now substantially reduced, an industry in constant decline, suffocated by the duties. All that has increased is the quantum of both the duties and the financial aid to AMSA.

All it has done is to postpone the inevitable. AMSA cannot survive without aid. But not only aid, it will have to be increasing aid, and that while South Africa's economy is in decline, our money coffers are depleted.

Government’s response to all of this is to double-down on their duty-orientated approach by, notwithstanding all indications and evidence that the implementation of duties is an ineffective remedy, increasing the dosage. This will prove to be a fatal approach, but apparently the only solution that this socialist government can come up with, simply because they do not understand, nor trust market powers.

In the meantime, all users of steel, and that is all South Africans, must brace themselves and prepare for the day that there will no longer be an AMSA.

Gerhard Papenfus is the Chief Executive at the National Employers' Association of South Africa (NEASA). 

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