This is from "Foreign Policy" newsletter
Trump’s Tariffs Rattle Africa
Since U.S. President Donald Trump announced sweeping tariffs on U.S. trading partners last week, a tiny country that rarely makes headlines has gotten an unusual amount of
attention: Lesotho, which was hit with a 50 percent tariff—the highest on any single nation.
The tariffs are a foreign-policy own-goal for Washington, which is punishing one of the few African countries that relies
much more on trade with the United States than with China. China-Africa trade reached
$295 billion last year—more than four times that of U.S.-Africa trade.
The impact will be devastating for Lesotho, an export-reliant economy that in 2024 imported
$2.8 million in goods from the United States and exported $237 million. But Trump’s so-called reciprocal tariffs, which start at a baseline 10 percent and grow steeper for countries with larger trade deficits with Washington, have rattled the entire continent.
Trump’s executive order
effectively ends the African Growth and Opportunity Act (AGOA), a 2000 law that provided more than 30 countries duty-free access to the U.S. market. AGOA, which sought to bolster economic relations between the United States and Africa, was set to expire in September amid fears that Trump would not renew it.
Economists
warn that Trump’s tariffs on African countries make little sense and will harm U.S. consumers. Because the continent exports mostly
raw materials instead of finished products, tariffs will drive up the costs of goods in the United States, including jeans, ice cream, and chocolate.
Lesotho’s main exports are uncut diamonds and denim sold to U.S. clothing giants such as Levi’s and Wrangler. Madagascar, which faces a 47 percent tariff, produces 80 percent of the world’s vanilla. And Ivory Coast, hit with a 21 percent tariff, is the world’s largest cocoa producer.
Ironically, the African countries that Trump listed among the “worst offenders” in trade relations will likely be shielded from the full blow of tariffs because the policy
currently exempts exports of oil and gas, as well as many
critical minerals.
These include the two economies that account for
more than half of all U.S. imports from the continent, South Africa and Nigeria. Although they face tariffs of 31 percent and 14 percent, respectively, nearly
half of South Africa’s exports to the United States are
critical minerals, while crude petroleum, mineral fuels, and gas products account for more than
90 percent of Nigeria’s exports to the country.
So far, African leaders have not threatened retaliation, hoping to negotiate exemptions instead. Zimbabwe, for instance, has
offered to scrap all tariffs on U.S. goods, and South Africa is seeking talks with Trump. “We want to engage the Trump administration. In fact, even before this issue of tariffs, the president was going to send the delegation to the U.S.,” South African Deputy President Paul Mashatile
said.
Nigeria’s central bank, meanwhile, has
sold nearly $200 million in recent days to stabilize its currency, the naira, as market reactions caused oil prices to plunge.
There is also talk of
accelerating intra-African trade through the African Continental Free Trade Area, established in 2018. “Now more than ever we should be focusing as African countries on how do we trade more together, how do we create an easier framework,” Jeremy Awori, the CEO of African conglomerate Ecobank,
told Bloomberg TV.
Ultimately, Trump’s tariffs will
push African nations to form new alliances as well as deepen established trade with countries including China, India, and the United Arab Emirates. Nigerian Trade Minister Jumoke Oduwole
said the country would look to new markets to “reduce and mitigate trade risks.”
China in particular stands to gain. Last year, Beijing
eliminated tariffs for goods from 33 African countries as it seeks to deepen its strong trade relationship with the continent. Under Trump’s global trade war, the gap between Africa’s U.S. and China trade will only grow, leaving the continent even more
vulnerable to contractions in China’s economy.
www.businessinsider.nl
