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 Growth funding cuts, it has needed to digest US President Donald Trump’s seemingly random and illogical huge 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 nations.
The 25-year-old programme would in all probability 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 advised ISS Right now – successfully making AGOA null and void.
Then, late on Wednesday after the markets crashed due to Trump’s ‘tariff tantrum’, he quickly suspended tariff hikes for 90 days, aside from a ten% baseline tariff and people on China, which had been elevated to 145%.
Few African nations have absolutely used AGOA advantages, nevertheless it has been helpful for the likes of South Africa, Lesotho, Madagascar and Eswatini. One of many anomalies of Trump’s tariffs was that nations benefitting most from AGOA had been hardest hit as a result of their exports below AGOA helped them obtain commerce surpluses with the US. In order that they had been hit with excessive ‘reciprocal’ tariffs, supposedly to steadiness commerce.
Essentially the most excessive instance of this was tiny Lesotho, slapped with the very 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 giant commerce deficit, so Lesotho was slapped with a 50% tariff. Lesotho imposes zero or little or no tariffs on US imports. The tariff might price 12 000 jobs, Lesotho Commerce Minister Mokhethi Shelile statedand 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 in all probability additionally wipe out its textile trade, at a price of 60 000 jobs.
South Africa was additionally more likely to be hit arduous, with about US$3.567 billion of primarily car and agricultural annual exports below AGOA (as of 2023) more likely to be worn out. That will 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 nations, like Kenya, escaped with the minimal tariff of 10%.
The way to react might be a better choice for African nations than for some others, like China and the European Union, which retaliated with giant tariffs on US imports. African nations have neither the financial power nor the dimensions of US imports to battle 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 steadiness commerce.
Shelile stated Lesotho was speaking to US wheat producers about shopping for their product and was contemplating giving US corporations a stake within the nation’s proposed development of extra energy mills. Madagascar’s overseas affairs ministry stated 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 enlargement of American imports inside 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 nations might alter 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 known 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 nations 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 lifeless for the long run. The query is, nevertheless, whether or not we will have it prolonged both by administrative decree or by Congress for a brief interval to permit a extra transactional method to be launched.
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‘It might not be good to have a void created with AGOA ending and no coverage to take its place. The one winner shall be China. Possibly another coverage may very well be agreed on within the 90-day reprieve interval.’
Nonetheless Eckart Naumann, a Commerce Regulation Centre Affiliate, believes that even when the ‘reciprocal’ tariffs return, some AGOA beneficiaries might nonetheless get pleasure from a relative benefit over different nations since all nations 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 necessary for South Africa, ‘so the AGOA benefit continues there.’
Nonetheless, he believes ‘the political setting for an AGOA renewal may be very poor proper now, although this will 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 nations 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 provides alternate options to the US market.
PetGuide, ISS Pretoria
