Lesotho Faces 50% Tariff Threat From US, 40,000 Jobs At Risk

Lesotho, a leading African exporter of garments to the US, is facing an uncertain future due to President Trump's threat of imposing a 50% tariff on its exports. The country's trade minister, Mokhethi Shelile, has expressed concern that such a high tariff rate could drive their textile industry out of US markets or even force closures. Lesotho supplies major American brands like Levi’s and Wrangler, and the industry contributes 10% to the country's $2 billion GDP. However, the tariff uncertainty has already led to mass job cuts, with more than 40,000 people employed in the textile industry before the tariffs were announced.

Some of Lesotho’s textile factories are already preparing for closure, cutting down on their workforce as they await the outcome of the tariff threat. The situation has become so dire that the country's government declared a "state of disaster" this week. Shelile insists that this declaration will remove administrative hurdles and speed up efforts to create thousands of agricultural and construction jobs, aiming to add 60,000 jobs over the next two years. Additionally, ministries will be required to allocate 3% of their budget to a $22.2 million fund to support youth grants and entrepreneurial loans, addressing the fact that at least 48% of the youth population in the country is unemployed.

Analysts have strongly criticized the proposed tariffs on Lesotho, describing them as unjustifiable and potentially harmful. Colette van der Ven, chief executive of an advisory firm on international trade, argued that Lesotho only accounts for 0.02% of the US total deficit, making a 50% levy illogical. She pointed out that the textile industry’s dispersed value chain means that penalizing Lesotho won’t help lower the US trade deficit. Shelile also noted that the US tariffs will only exacerbate problems that have plagued Lesotho for years, as the country looks to include more buyers and shift away from the US market.

However, industry experts caution that finding other markets, especially within the African continent, may not be an easy fix. Donald MacKay, chief executive of a trade advisory firm, explained that African customers generally don’t purchase the same goods as Americans, making it difficult to replace the US market with African demand. Despite these challenges, the US government is developing a “template” to guide future trade negotiations with African nations, and President Trump has recently hosted leaders from several African countries to negotiate trade deals.