If they’re imposed, Trump’s blizzard of ‘reciprocal’ tariffs will hit AGOA beneficiaries greater than most.
Africa is being hit by one catastrophe after one other. Nonetheless reeling from United States Company for Worldwide Improvement funding cuts, it has needed to digest US President Donald Trump’s seemingly random and illogical large commerce tariffs.
These might have successfully killed the African Development and Alternative Act (AGOA), which gave non-reciprocal, duty-free entry to the profitable US marketplace for most exports from 32 eligible sub-Saharan international locations.
The 25-year-old programme would most likely have been terminated anyway when it got here up for renewal in September. However the enormous tariffs, which had been to kick in on 9 April, would override AGOA advantages, US officers instructed ISS At this time – successfully making AGOA null and void.
Then, late on Wednesday after the markets crashed due to Trump’s ‘tariff tantrum’, he briefly suspended tariff hikes for 90 days, aside from a ten% baseline tariff and people on China, which had been elevated to 145%.
Few African international locations have absolutely used AGOA advantages, however it has been helpful for the likes of South Africa, Lesotho, Madagascar and Eswatini. One of many anomalies of Trump’s tariffs was that international locations benefitting most from AGOA had been hardest hit as a result of their exports below AGOA helped them obtain commerce surpluses with the US. So that they had been hit with excessive ‘reciprocal’ tariffs, supposedly to stability commerce.
Probably the most excessive instance of this was tiny Lesotho, slapped with the best tariffs globally of fifty%, adopted by Madagascar (47%), Mauritius (40%) and South Africa (31%).
Lesotho exported US$237.3 million of products to the US in 2024 – primarily textiles below AGOA and diamonds. It imported solely US$2.8 million price of products from the US, largely as a result of Lesotho imports virtually all its necessities from neighbouring South Africa.
However that created a comparatively massive commerce deficit, so Lesotho was slapped with a 50% tariff. Lesotho imposes zero or little or no tariffs on US imports. The tariff may value 12 000 jobs, Lesotho Commerce Minister Mokhethi Shelile mentioned, and shut 11 factories.
Equally, Madagascar exported US$733.2 million in items to the US in 2024, a lot of it in textiles below AGOA, and imported solely US$53.4 million in items, creating a big commerce deficit. So Madagascar was smacked with a 47% tariff, which might most likely additionally wipe out its textile business, at a price of 60 000 jobs.
South Africa was additionally prone to be hit onerous, with about US$3.567 billion of primarily car and agricultural annual exports below AGOA (as of 2023) prone to be worn out. That may knock round 0.3 share factors off gross home product that grew by solely 0.6% final 12 months.
The perverse logic of the tariffs meant that some international locations, like Kenya, escaped with the minimal tariff of 10%.
react might be a neater determination for African international locations than for some others, like China and the European Union, which retaliated with massive tariffs on US imports. African international locations have neither the financial energy nor the dimensions of US imports to combat again, so their route is negotiation.
Kenya despatched a delegation to Washington on 1 April and South Africa was getting ready to ship one too, however was first assessing the ramifications. Others had been making an attempt to get appointments to plead for revocation or discount of tariffs. Some are searching for various markets for his or her exports and planning to purchase extra US items to assist stability commerce.
Shelile mentioned Lesotho was speaking to US wheat producers about shopping for their product and was contemplating giving US firms a stake within the nation’s proposed development of extra energy mills. Madagascar’s international affairs ministry mentioned it was already speaking to US authorities.
Zimbabwean President Emmerson Mnangagwa – regardless of being below US sanctions for human rights violations – piously introduced that he was suspending tariffs on US items ‘to facilitate the growth of American imports throughout the Zimbabwean market, whereas concurrently selling the expansion of Zimbabwean exports destined for the [US].’
Trump had slapped an 18% tariff on Zimbabwe, which had solely US$111.6m price of commerce with the US in 2024, with the US exporting US$43.8m price of tractors and different items in 2024 whereas importing US$67.8m price of ferroalloys, tobacco and sugar.
Some African international locations may regulate their commerce insurance policies after the US accused them of ‘unfair commerce practices’. Nigeria’s longstanding import ban on 25 product classes, Kenya’s 50% tariff and what the US Commerce Consultant referred to as ‘burdensome regulatory necessities’ on US corn imports had been cited. South Africa’s 30% tariff was partly attributed to unfairly excessive tariffs on imports of US poultry and pork.
There are some indicators of a coordinated response from Africa. Shelile confirmed, even after Trump’s reversal, that the Southern African Customs Union’s commerce ministers would meet early subsequent week to attempt to navigate a path ‘out of this quagmire.’ Madagascar’s authorities has begun consulting different African international locations to coordinate a standard place.
The total implications of Trump’s tariff tantrum stay murky, particularly after his Wednesday flip-flop. Did he withdraw them ‘provisionally’ solely to save lots of face, or will they arrive roaring again in three months? And what does this all imply for AGOA?
Like most analysts, Manchester Commerce President Stephen Lande believes, ‘AGOA is useless for the long run. The query is, nonetheless, whether or not we are able to have it prolonged both by administrative decree or by Congress for a brief interval to permit a extra transactional strategy to be launched.
‘It might not be good to have a void created with AGOA ending and no coverage to take its place. The one winner can be China. Possibly an alternate coverage could possibly be agreed on within the 90-day reprieve interval.’
Nevertheless Eckart Naumann, a Commerce Legislation Centre Affiliate, believes that even when the ‘reciprocal’ tariffs return, some AGOA beneficiaries may nonetheless take pleasure in a relative benefit over different international locations since all international locations will face the additional tariffs.
But when the excessive tariffs imposed on clothes producers like Lesotho, Madagascar and Mauritius are re-imposed, they are going to be at a significant drawback to a rustic like Kenya, which obtained the ten% baseline tariff.
Naumann notes that the US exempted some merchandise from tariffs, primarily minerals and vitality, and a few of these had been essential for South Africa, ‘so the AGOA benefit continues there.’
Nonetheless, he believes ‘the political surroundings for an AGOA renewal could be very poor proper now, although this will likely change as soon as the mud settles.’ He means that African states forge stronger commerce alliances with dependable companions inside a rules-based buying and selling system.
With the reprieve, African international locations have time to coordinate a response for a doable reinstatement of tariffs after 90 days. They need to additionally speed up implementation of the African Continental Free Commerce Space settlement, which presents options to the US market.
Peter Fabricius, Marketing consultant, ISS Pretoria
