11 May 2025
News 24
by Zuko Ntsangani
The escalating trade tensions between China and the US are not only reshaping international trade dynamics, but also posing significant risks for developing economies such as South Africa. With relatively low levels of protection for its domestic industries, South Africa remains particularly vulnerable to the potential spillover effects of such conflicts.
One of the main risks is trade deflection, which occurs when goods originally intended for the US or Chinese markets are redirected to alternative destinations, such as South Africa, due to the high tariffs the two countries impose against each other. Exporters from these countries may attempt to offload excess stock quickly, often at prices below their domestic market value, or even below the cost of production. This practice, known as dumping, can result in a surge of underpriced imports into the local market.
Following the imposition of Section 232 measures on steel by the previous US administration under President Donald Trump, global oversupply intensified, leading to increased trade deflection. In response, many countries took defensive measures by implementing trade remedy measures to protect their domestic industries, which left South Africa exposed and vulnerable to an influx of imports. For instance, the European Union imposed safeguard measures on steel imports, which included country-specific tariff quotas for 26 product categories. Similarly, the UK established its own safeguard measures on certain steel products after Brexit. In 2022, Turkey continued imposing anti-dumping duties on Chinese hot-rolled flat steel products, a measure initially introduced in 2017.
Consequently, the domestic industry approached the International Trade Administration Commission of South Africa (ITAC) for relief, and safeguard measures were introduced in 2016. The consequences of such trade deflection can be significant. Domestic industries may suffer material injury in the form of declining sales, reduced production levels, compressed profit margins, suppressed prices, underutilised capacity, lower productivity, and others. Over time, these challenges threaten the competitiveness, sustainability, and growth of key sectors putting jobs and long-term economic resilience at risk.
To mitigate these risks, ITAC continuously monitors trade flows and shifts in trade patterns between South Africa and its global partners. Early identification of unusual trade activity allows for timely, evidence-based interventions aimed at protecting domestic industries. This forms the core of the work undertaken by ITAC’s Trade Remedies unit, ensuring that trade remains fair and that South African producers are not unfairly disadvantaged by global trade developments.
South Africa has consistently used the instruments provided by the World Trade Organisation (WTO) framework to ensure fair trade and protect domestic production. These instruments include anti-dumping, safeguard, and countervailing measures. According to the commission’s 2023/2024 Annual Report, from 1995 to June 2022, the commission initiated 13 countervailing investigations and 252 anti-dumping investigations. Additionally, during the same period, nine safeguard investigations were conducted. Since 2012, there has been more significant interest in safeguard investigations, with cases involving lysine, frozen potato chips, hot-rolled steel, and cold-rolled steel conducted between 2012 and 2017.
The commission remains committed to protecting local industries from unfair trade practices that may arise from trade deflection, while also promoting their competitiveness.
Zuko Ntsangani is a Senior Manager for Trade Remedies at the International Trade Administration Commission of South Africa, which is a public entity.