South Africa's ITAC, acting on an application from STI Electrical (Pty) Ltd, recommended increasing the general customs duty on transformer cores with a power handling capacity not exceeding 50,000 KVA (tariff subheading 8504.90, split into new lines 8504.90.10 and 8504.90.90) from 5% to 15% ad valorem — the WTO bound rate. SARS gave effect to the change via a Schedule No. 1 tariff amendment effective 27 June 2025. As a SACU common external tariff, the increase applies across South Africa, Botswana, Eswatini, Lesotho and Namibia. ITAC found the domestic industry's production and sales volumes had declined over the investigation period and that it was price-uncompetitive against imports, and recommended a three-year review of industry performance post-implementation.

Analyst notesShow

Mechanism

ITAC investigated an application from STI Electrical (Pty) Ltd, a domestic manufacturer of transformer cores (thin laminations of cold-rolled grain-oriented silicon steel used in power/distribution transformers). The Commission found that domestic production and sales volumes had declined over the three-year investigation period, that local producers were price-uncompetitive against imports, and that profitability and cost structures had deteriorated — underutilised capacity meant the industry could not reach the scale economies needed to lower marginal costs. ITAC recommended raising the general rate of customs duty on the relevant HS subheading (8504.90, now split into 8504.90.10 and 8504.90.90) from 5% to the WTO bound ceiling of 15%. SARS implemented the change by amending Schedule No. 1 to the Customs and Excise Act, effective 27 June 2025. As a SACU common external tariff item, the duty applies uniformly across all five SACU member states (South Africa, Botswana, Eswatini, Lesotho, Namibia).

Downstream implications

Raises input costs for transformer/switchgear manufacturers and power

utilities across SACU that source cores from outside the customs union, at a moment of elevated regional demand for grid and distribution transformers (renewable interconnection, grid replacement/upgrade cycles).

Consistent with ITAC's pattern of narrow, applicant-driven tariff-line

adjustments (see also the SACU Report 742 stainless-steel-tubing rebate and Report 739 palm-oil rebate) rather than economy-wide industrial policy — severity is capped by the single-HS-line, single-applicant scope even though the percentage-point jump (5%→15%, tripling the rate) is large in relative terms.

ITAC's recommended three-year review creates a concrete date to watch for

whether the protection is extended, adjusted, or allowed to lapse.

Open questions

Import trade value for tariff line 8504.90 (transformer cores) was not

disclosed in the sources reviewed — would allow upgrading to a more precise quant severity if a trade-value figure becomes available.

Whether AfCFTA- and Mercosur-preferential rates for this line were

adjusted in step with the general rate (GTA's summary references AfCFTA/Mercosur-specific treatment but full figures require gated access).

Sources

Primary: ITAC — ITAC increases customs duties on transformer cores from 5% to 15%

Secondary: Global Trade Alert — SACU: Increase in customs duty on transformer cores (intervention 146365)

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Mechanism

Downstream implications

Raises input costs for transformer/switchgear manufacturers and power

Consistent with ITAC's pattern of narrow, applicant-driven tariff-line

ITAC's recommended three-year review creates a concrete date to watch for

whether the protection is extended, adjusted, or allowed to lapse.

Open questions

Import trade value for tariff line 8504.90 (transformer cores) was not

disclosed in the sources reviewed — would allow upgrading to a more precise quant severity if a trade-value figure becomes available.

Whether AfCFTA- and Mercosur-preferential rates for this line were

adjusted in step with the general rate (GTA's summary references AfCFTA/Mercosur-specific treatment but full figures require gated access).