A worker uses a sewing machine at Afri-Expo Textile Factory in Maseru, Lesotho, on March 19.ROBERTA CIUCCIO/AFP/Getty Images
Some of Africa’s poorest countries have been targeted for the worst punishment from the higher tariffs announced by U.S. President Donald Trump this week, raising fears of job losses and greater poverty in countries such as Lesotho and Madagascar.
Governments across Africa are struggling to understand the U.S. tariff increases, with many pleading for meetings with Trump administration officials to discuss and challenge the higher rates.
Lesotho, a small mountain kingdom where a third of all children under the age of 5 are stunted by malnutrition, was hit with a 50-per-cent tariff rate – the highest of any country in the world under Mr. Trump’s new plan. The boost could devastate its textile sector, a main source of employment in the landlocked country.
Madagascar, an island country where 80 per cent of the population earns less than US$2.15 a day, is facing a 47-per-cent tariff rate. Even the war-ravaged countries of Sudan and South Sudan were not spared – both are now facing 10-per-cent tariffs.
When he unveiled the higher tariffs on Wednesday afternoon, Mr. Trump explained just one of the increased rates that he was imposing on dozens of African countries. Pointing to his new 30-per-cent tariff for South Africa, he said: “They’ve got some bad things going on in South Africa. We’re paying them billions of dollars, and we cut the funding, because a lot of bad things are happening in South Africa.”
This was a reference to his termination of U.S. foreign aid to South Africa last month after he falsely accused it of seizing land from farmers and persecuting its white minority.
For every affected country worldwide, however, the new tariff rates seemed to be based on a formula in which the country’s U.S. trade surplus was divided by its total exports to the United States. This number was then cut in half for a “discounted” tariff.
This formula creates a higher tariff rate for low-income countries such as Lesotho and Madagascar that are simply too poor to import many U.S. products. Lesotho, for example, imported just US$2.8-million in American goods last year. This created a big trade surplus because its exports to the United States – mainly diamonds and textiles – totalled US$237-million in the same year.
“It is a tiny, landlocked, mountainous country with less than 2,000 kilometres of paved roads – it’s not a surprise this isn’t a big market for big American imported pickups or SUVs,” Chris Roberts, an Africa specialist and research fellow at the Canadian Global Affairs Institute, told The Globe and Mail.
In a speech to the U.S. Congress last month, Mr. Trump mocked Lesotho as a country that “nobody has ever heard of.” The Lesotho government said it was shocked by the insult and would send a letter of protest to Washington.
Lesotho and Madagascar have both benefited from U.S. trade privileges under the African Growth and Opportunity Act (AGOA), which allowed them to build substantial textile industries, employing thousands of people. But this is not merely charity. Under the program’s rules, both countries must make extensive use of U.S. materials in their clothing factories.
The higher tariffs, and the widely predicted termination of AGOA under the Trump administration, would be disastrous for the textile sectors in Lesotho and Madagascar. Those sectors are among the biggest private employers in both countries.
Lesotho’s Trade Minister, Mokhethi Shelile, told reporters Thursday that he wants to travel urgently to the U.S. to “plead our case.” His biggest worry, he said, is the potential closing of the textile factories and the job losses that would cause.
The death of AGOA would also cost thousands of jobs in South Africa, where the automotive and citrus sectors are among the industries that benefit from U.S. trade preferences.
South African leaders on Thursday were grappling with the impact of the higher U.S. tariffs, which are seen as a foreshadowing of AGOA’s termination.
“The Presidency has noted with concern the newly imposed tariffs,” President Cyril Ramaphosa’s office said in a statement. “Unilaterally imposed and punitive tariffs are a concern and serve as a barrier to trade and shared prosperity.”
South Africa’s Automotive Business Council said the U.S. tariff increases were “deeply disappointing” and could have serious implications for jobs and investment in the country.
Some of South Africa’s mineral exports to the U.S. will be exempted from the new 30-per-cent tariff. But the Minerals Council, representing the country’s mining sector, said the higher tariffs could damage the U.S. car industry, which in turn could reduce demand for South African minerals.
“Global growth coming under threat is bad news for the entire South African mining industry,” said Hugo Pienaar, chief economist at the Minerals Council.