Welcome to the Age of Unyielding Zombie Tariffs

The recent Import Duty Investigation Report released by XA Global Advisors reveals that almost 94% of tariffs enforced by the International Trade Administration Commission of South Africa (Itac) have not been reviewed for two decades.

Once implemented, import duties are seldom removed, thus continuously protecting companies that operate under the 3,607 tariff codes associated with these duties.

“They are, in practice, everlasting,” remarks Donald MacKay, CEO of XA Global Advisors.

Read: Confusion and panic over proposed steel tariff increases

This scenario incurs a hefty price: South Africans contributed an astonishing R108 billion in duties from July 2024 to June 2025, with nearly 94% of these tariffs last reviewed before 2005.

At the report launch this week, MacKay stressed the necessity for termination dates to be included with any subsidies or duties granted. While Itac had previously committed to reviewing duties after three or five years, that promise is no longer being honored.

“However, the existence of an industry that needs protection doesn’t justify indefinite duty enforcement. Businesses that remain shielded from competition for long periods may lose their competitiveness. This explains the significant hurdles monopolies face when competition is introduced.”

“By enforcing duties forever, we create a stagnant economy that struggles to adapt to swift global changes,” warns the report.

“Typically, the primary beneficiaries of tariff hikes are not nimble, young enterprises; instead, they are largely older, less agile firms that find it difficult to succeed in a modern market.”

Duties often remain in place even in the absence of domestic manufacturers—often as a precaution in case a local entity decides to start production.

Years-long Investigations

As it stands, tariff investigations at Itac take an average of 27 months to finalize, significantly exceeding the six-month target.

For most of the last 22 years, investigations concluded within six to twelve months, though one case lingered for over five years.

Businesses facing challenges from import competition can petition Itac for a duty increase, a process that should ideally last no longer than six months once involved parties respond, leading Itac to present its recommendations to the Minister of Trade, Industry, and Competition. This recommendation is then sent to the Minister of Finance, and upon approval, the SA Revenue Service (Sars) is responsible for executing the duty modification.

However, as of 2023, investigations were averaging around 23 months at Itac, with a slightly improved duration of 18 months projected by June 2025.

“In the first half of 2025, there are more ongoing investigations and fewer concluded compared to the previous six-month period. This trend is worrying,” the report states. “Older cases are becoming increasingly unresolved.”

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XA Global Advisors urges Itac to reach decisive outcomes, either approving or rejecting applications for duty modifications.

“These investigations have real implications for people and employment. It’s time to reach a decision.”

Winners and Losers

There is an effort to exercise greater control over various value chains, driven by the belief that sectors previously in decline can be revitalized through a mix of tariffs, rebates, subsidies, and import restrictions, according to MacKay.

“Given the emphasis on protecting intermediate goods, we risk sustaining upstream producers at the expense of labor-intensive downstream sectors.”

A significant instance is the extensive examination of the steel industry occurring, involving R52 billion in imports across 460 tariff codes and affecting 16,319 traders.

Read: Tariff lifeline for ArcelorMittal means higher prices for customers

Concerns are rising that Itac may impose emergency measures to further increase duties beyond the so-called bound rates established when South Africa joined the World Trade Organisation. There’s also the potential that South Africa—like the US and other countries—might invoke national security as a reason to ignore its obligations under the General Agreement on Tariffs and Trade (GATT).

Matthew Stern, director at DNA Economics, notes that the report reveals “frightening and graphic” findings. The framework for tariff reviews appears dysfunctional. This doesn’t discount the complexities in the decision-making process. Beneficiaries and losers will inherently exist, necessitating a degree of understanding for Itac amid its struggles.”

“Yet, utilizing a fragmented tariff line approach sends a misleading message to businesses and lacks strategic intent,” Stern continues.

Another trend noted in the report is the rising issuance of duty rebates rather than the elimination of existing duties. These rebates require permits that come with stipulations.

For example, in the textiles sector, applicants must be members of a bargaining council (increasing labor costs); agree to purchase specific volumes of locally produced textiles; restrict sales to the Southern African Customs Union country where they were produced; and limit trade to retailers that have committed to the Retail Clothing, Textile, Footwear and Leather Masterplan.

This amounts to governmental overreach, as many of these conditions were not present when the rebate was originally introduced.

Since the rules for rebate permits are classified as guidelines rather than formal regulations, they can be issued by Itac without needing ministerial approval.

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Processing permits is time-consuming, adding administrative burdens and costs for businesses that rely on them. Many of these rebates apply to products not made locally, primarily targeting intermediate goods. When companies struggle to obtain these raw materials affordably, factory production halts, resulting in job losses.

Itac is now looking to implement import controls on 392 steel tariff codes, which account for R45 billion in annual imports. This means that imports could be entirely halted without the necessary permit, and Itac is proposing a fee for companies to help manage the added administrative burden related to permit issuance.

“It’s easy to picture a scenario similar to what we witness with Home Affairs, where companies are left waiting for permit approvals,” the report comments.

ArcelorMittal SA has submitted the highest number of applications for duty increases—12 in a single year, either individually or collectively. During the review period, private sector companies submitted 111 applications for duty hikes, with 62% being one-time applications.

The report proposes several recommendations to improve trade efficiency:

• Review duties that are overdue for reconsideration
• Abolish reciprocal agreements that necessitate concessions from applicants, as these undermine trust in the system
• Publish a non-confidential version of any reciprocal agreement
• Amend tariff regulations to impose time limits on tariff investigations, implement variable duty trigger changes to accelerate decision-making, mandate Itac to publish investigation reports, and insist on a review date for all duty increases.

Read: Tariff decision delay could shutter SA’s R2.5bn roasted groundnut industry

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