US tariff shake-up sends ripples through African trade and global supply chains

The United States has ushered in a new era of protectionism with sweeping tariff increases targeting steel, aluminium and vehicles. With some levies climbing as high as 25%, the effects are being felt not only in US boardrooms but across global value chains and, notably, throughout Africa.

Companies have already begun reshaping their production and shipping routes in response. The tariffs, which particularly hit imports from countries such as China, have reignited trade tensions and placed new strain on international freight systems, affecting both maritime and air cargo.

The uncertainty surrounding these tariffs is reverberating through supply chains, raising costs and forcing businesses to rethink inventory strategies, sourcing models and long-term investment planning.

Africa’s trade agenda

For African economies, the new US tariff regime comes at a critical time. Several countries on the continent benefit from the African Growth and Opportunity Act (Agoa), a US trade programme that grants duty-free access to certain goods. But Agoa is under scrutiny, particularly in relation to countries like South Africa, whose trade policies have drawn criticism from Washington. Concerns that African markets are not sufficiently open to US exports have sparked debates about the future of Agoa, including whether it should be replaced or radically reformed.

Simultaneously, the continent is in the midst of a landmark integration effort through the African Continental Free Trade Area (AfCFTA), broader African regional trade blocs and customs unions and other regional deals like the Tripartite Free Trade Area. These agreements are designed to boost intra-African trade, promote industrialisation and reduce dependence on raw material exports.

Yet, the shifting global trade environment, especially the rise of unilateral tariff actions from major powers, risks undermining the benefits of these frameworks. While the goal of the AfCFTA in particular is to open up new trade corridors between existing regional economic communities and customs unions in Africa and accelerate intra-African trade, trade in goods under the AfCFTA is still in its very early stages, with relatively few countries actively trading under the Guided Trade Initiative (GTI). African exporters may find it increasingly difficult to compete globally if external partners tighten trade terms, while regional integration alone may not fully compensate for reduced access to large consumer markets like the US.

Business implications

For businesses, the confluence of these trends demands agility and strategic foresight. Global supply chains are becoming more regionalised, and companies are exploring alternative markets and production sites to hedge against rising protectionism. In Africa, firms must balance opportunities within the continent, where trade liberalisation is gaining pace, with the need to stay competitive in a more fragmented global economy.

Exporters reliant on Agoa or US markets must prepare for potential preference erosion, while investors may look more favourably at industries aligned with AfCFTA’s goals: local manufacturing, logistics and cross-border infrastructure development and operation.

Meanwhile, global shifts in tariff regimes may push multinationals to reevaluate their footprints. For African governments, the task is twofold: defend preferential access to markets like the US, while accelerating reforms that make regional trade agreements like AfCFTA more effective.

Steel sector

Africa’s steel industry, particularly in South Africa, is facing mounting pressure. With the US market becoming less accessible due to higher tariffs, previously competitive exporters may find themselves priced out. These changes directly threaten the benefits afforded under Agoa.

Producers are already beginning to seek alternatives within Africa, leveraging AfCFTA to redirect sales and access raw materials regionally. But the pace of AfCFTA implementation, including harmonising standards and improving logistics, will be crucial to absorbing the external shocks triggered by US  protectionism.

Vehicle industry

The vehicle manufacturing sector, a growing component of African industrial output, is also feeling the heat. Plants operated by global brands such as Ford, Toyota and VW in countries like South Africa, Morocco and Kenya rely heavily on international supply chains for parts and raw materials. These chains are being disrupted not only by US tariffs but also by escalating tensions between the US and China, a major source of components.

Rising input costs and uncertainty around export access to the US market may force manufacturers to refocus on intra-African sales and assembly. For many, this represents both a necessity and a strategic opportunity, particularly as AfCFTA aims to lower intra-continental tariffs and stimulate domestic demand for vehicles in line with the domestic initiatives already being implemented in many larger African economies.

Wine industry

With the US market effectively being closed, many export-reliant wine producers are exploring the redirection of product into Europe and the United Arab Emirates, as well as into local markets, while European wine producers are simultaneously looking to redirect exports into Africa.

Insurance

For the insurance sector, the shifting trade environment brings heightened exposure. Marine cargo, transport and business interruption policies are under pressure as delays, rerouting and price volatility increase. Insurers are being pushed to revise risk models and offer more nuanced coverage solutions, including political risk insurance and tariff-triggered interruption clauses.

Furthermore, insurers with significant portfolios in manufacturing, logistics or import-export sectors will need to actively manage concentration risk and monitor developments in trade policy more closely. Growing demand is anticipated for coverage tied to geopolitical shifts, particularly in countries exposed to US trade dynamics.

China

Amid heightened US tariffs, Africa is increasingly positioned as a strategic alternative for China to sidestep punitive trade barriers. Chinese firms, particularly in steel, electronics and automotive components, may view African nations as production hubs for:

• “Tariff-neutral” manufacturing: Products made in Africa, especially under AfCFTA frameworks or through existing bilateral and multilateral trade deals, may qualify for preferential treatment in global markets that are tightening against Chinese exports. Existing domestic incentive programmes in Africa that align with key interest sectors (for example, mining and vehicles) may further encourage Chinese investment into Africa.
• Agoa leverage: Although Agoa’s future is uncertain, some Chinese manufacturers may attempt to partner with African firms to gain indirect access to the US market under existing trade preferences.
• Access to raw materials and cheap labour: Africa remains rich in natural resources and offers labour cost advantages, aligning well with China’s global supply chain diversification strategy.
• Belt and Road alignment: Many African countries are already recipients of Chinese infrastructure investment. Setting up industrial bases enhances the rate of investment in those projects and deepens China’s influence across the continent.

This trend could transform African manufacturing zones into key nodes in China’s export strategy — a move that could raise geopolitical stakes but also generate significant foreign direct investment, employment and industrial growth across the region.

As the global order continues to shift, countries and companies alike must rethink how they trade, with whom and at what cost. Africa stands at a crossroads, and its response to these pressures will shape its economic trajectory in the years to come.

HB Senekal and Julia Choate are partners at Bowmans.