{"id":833536,"date":"2025-07-31T07:00:00","date_gmt":"2025-07-31T05:00:00","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=833536"},"modified":"2025-07-31T07:02:39","modified_gmt":"2025-07-31T05:02:39","slug":"the-important-south-african-city-that-could-be-crushed-by-the-united-states","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/business\/833536\/the-important-south-african-city-that-could-be-crushed-by-the-united-states\/","title":{"rendered":"The important South African city that could be crushed by the United States"},"content":{"rendered":"\n

East London faces serious challenges as Mercedes-Benz is reportedly concerned about the future of its production plant in the city due to the impending US tariffs.<\/p>\n\n\n\n

The Mercedes-Benz plant contributes significantly to the city\u2019s jobs and broader economy, and a potential shutdown or exit could spell disaster for the region.<\/p>\n\n\n\n

The German automaker\u2019s operations are under threat due to a looming 30% tariff from the United States on certain South African exports, effective from Friday, 1 August 2025. <\/p>\n\n\n\n

This new tariff follows a 25% tariff on the auto sector implemented in April, and builds on an existing 10% universal levy on all exports at the same time.<\/p>\n\n\n\n

The move has created a hostile environment for South African manufacturers that rely on access to the US market. The automotive industry is among the hardest hit. <\/p>\n\n\n\n

According to the National Association of Automobile Manufacturers of South Africa (Naamsa), vehicle exports to the US dropped by a staggering 82% in the first half of 2025.<\/p>\n\n\n\n

Only 2,875 vehicles were shipped to the US between January and June, compared to over 16,000 in the same period last year. Nearly all of these were C-Class models built at the Mercedes-Benz facility in East London.<\/p>\n\n\n\n

The East London plant, located along the Buffalo River, has been operational since 1962 and was for many years Mercedes-Benz\u2019s flagship<\/a> quality-control site outside of Germany. <\/p>\n\n\n\n

It is also one of the few plants globally that produces the luxury C-Class for export markets. The factory currently employs 2,400 people and manufactured 70,000 vehicles as of 2024.<\/p>\n\n\n\n

Additionally, it was reported<\/a> in 2023 that MBSA and its suppliers are estimated to contribute around 25% to East London\u2019s economy.<\/p>\n\n\n\n

Acting Eastern Cape Premier Mlungisi Mvoko warned<\/a> that the future of Mercedes-Benz in South Africa is now uncertain. <\/p>\n\n\n\n

\u201cYou cannot imagine East London without Mercedes-Benz. MBSA exports almost 90% of their cars to the US. In our interaction with them, they said that, given these tariffs, it would be difficult,\u201d Mvoko said.<\/p>\n\n\n\n

He added that the company had indicated it might need to rethink its operations in the country entirely.<\/p>\n\n\n\n

Thousands of jobs on the line <\/h2>\n\n\n\n
\"\"<\/a><\/figure>\n\n\n\n

The factory\u2019s temporary closure from 24 June to 31 July 2025, which was an annual non-production period based on production programme adjustments, has already offered a glimpse of the potential impact. <\/p>\n\n\n\n

According to the National Union of Metalworkers of South Africa (Numsa), the shutdown triggered short-time work at over 26 companies in the Eastern Cape, underlining the plant\u2019s role as the heartbeat of a far-reaching supply chain.<\/p>\n\n\n\n

Mercedes-Benz is known for its heavy investment in R&D and innovation, and its facility in East London has historically benefited from this. <\/p>\n\n\n\n

The German carmaker has invested over R13 billion in the local factory to build the latest C-Class model.<\/p>\n\n\n\n

Lizelle Maurice, executive director of the Border-Kei Chamber of Business, expressed<\/a> concern that the local economy would not withstand a prolonged or permanent decline in MBSA\u2019s output. <\/p>\n\n\n\n

\u201cEveryone is waiting with bated breath to see the impact of the trade tariffs. We are hoping that Mercedes-Benz is exploring other markets,\u201d she said.<\/p>\n\n\n\n

Denise van Huyssteen, CEO of the Nelson Mandela Bay Business Chamber, added<\/a> the uncertainty surrounding US-South Africa trade relations is already causing anxiety among business leaders.\u00a0<\/p>\n\n\n\n

\u201cThese OEMs are responsible for creating well over 100,000 jobs at their own operations and within their components supplier networks,\u201d she said. <\/p>\n\n\n\n

\u201cThe knock-on employment impact results in over 500,000 formal jobs across the entire automotive supply chain.\u201d<\/p>\n\n\n\n

She added that the impact goes well beyond vehicle production and component manufacturing. <\/p>\n\n\n\n

\u201cThe economic ecosystem around CKD (complete knocked-down) manufacturing extends into everything from logistics, office supplies, and cleaning services to banking, maintenance, and security,\u201d she said. <\/p>\n\n\n\n

\u201cEven sectors like tourism, hospitality, real estate, and education benefit from the ripple effects of a strong local manufacturing base.\u201d<\/p>\n\n\n\n

If Mercedes-Benz reduces or ends its operations in the city, it could trigger a downward spiral for a region already grappling with high unemployment and limited alternative sources of economic activity.<\/p>\n\n\n\n

BusinessTech reached out to Mercedes-Benz for comment on the potential impact of the US tariffs, but the company did not respond by the time of publication. <\/p>\n\n\n\n

However, MBSA confirmed to the Daily Maverick that production at the East London plant would resume on Thursday, as previously scheduled.<\/p>\n","protected":false},"excerpt":{"rendered":"

East London faces serious challenges as the impending US trade tariffs threaten manufacturers that have become the lifeblood of the region.<\/p>\n","protected":false},"author":92,"featured_media":833573,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9872],"tags":[23260,9130,853,23118],"class_list":["post-833536","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","tag-east-london","tag-mercedes-benz","tag-south-africa","tag-us-tariffs"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/833536","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/92"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=833536"}],"version-history":[{"count":6,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/833536\/revisions"}],"predecessor-version":[{"id":833605,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/833536\/revisions\/833605"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/833573"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=833536"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=833536"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=833536"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}