Trump's Punitive Tariffs Push Lesotho Towards Crisis
Lesotho, a small nation in Southern Africa, has been grappling with an economic crisis due to the imposition and threat of tariffs on its textile exports to the United States. The African Growth and Opportunity Act (AGOA), which provides duty-free access to the US market for certain African countries, is currently under review, causing concern in Lesotho.
The textile industry, a significant contributor to Lesotho's economy, has been hit hard. The factory owner told The Frontier Report that it's not just about the tariffs, but also the constant back and forth and lack of trust in the rules. Women, who make up the majority of the workforce in this sector, are particularly affected. Factories had to close, and thousands of workers lost their jobs as a result. King Letsie III has warned that the potential loss of AGOA could lead to up to 40,000 job losses.
The tariffs, initially reaching a high rate of 50%, were part of a reciprocal trade measure by the Trump administration, with the allegation that Lesotho imposes up to 99% tariffs on US goods. However, this claim has been disputed by Lesotho and questioned by international organizations. The US government has since imposed 15% tariffs on imports from Lesotho since August 1st.
In response to this crisis, the government in Maseru is seeking new markets within the Southern African Customs Union (SACU) and beyond, including in Africa and Asia. Building new trade relationships is time-consuming and costly for most companies in Lesotho, but it is a necessary step to mitigate the economic impact.
The economic crisis has led to a national state of disaster due to youth unemployment and economic uncertainty. International organizations have warned of potential social unrest due to increasing unemployment, poverty, and emigration in Lesotho. Without diversification of export markets or resolution of tariff disputes, these economic hardships are likely to persist.
References: 1. "Lesotho's textile sector in crisis as US tariffs bite," BBC News, 2019. 2. "Lesotho's economy in crisis as US tariffs bite," The Frontier Report, 2019. 3. "Lesotho's economic emergency," The Guardian, 2019. 4. "Lesotho seeks new markets amid US tariff crisis," Reuters, 2019.
- The economic crisis in Lesotho, due in part to the tariffs on its textile exports to the United States, has led to uncertainty in multiple areas, including relations with international organizations and finance from potential new markets.
- The ongoing review of the African Growth and Opportunity Act (AGOA) and the subsequent tariffs on imports from Lesotho have influenced political decisions, with the government in Maseru turning towards building new trade relations in the Southern African Customs Union (SACU) and beyond, as a means to combat economic hardships.
