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Lesotho’s trade minister has warned that the country’s textiles industry, a significant exporter to brands reminiscent of Levi’s and Wrangler within the US, risks having to fold if Donald Trump presses ahead with 50 per cent tariffs.
Mokhethi Shelile told the Financial Times that a national “state of disaster” declared this week would allow the federal government to fast track the creation of 60,000 jobs in other sectors over two years, because it prepares for the tip to the pause on the so-called liberation day tariffs the US president announced in April.
“We’re waiting anxiously for a possibility that we will likely be given , favourable rate and that favourable rate . . . can only be 10 per cent or less,” Shelile said. “Anything beyond that, we fear that our textile industry that’s exporting to the USA will either need to change to other markets or just just fold up.”
Lesotho, an unexpected success story born out of Washington’s 25-year-old African Growth and Opportunity Act (Agoa) that provides tariff-free access to the continent, was recently dismissed by Trump as “a rustic no one has ever heard of”.
The mountain kingdom of two.3mn is Africa’s largest garments exporter to the US, which in April threatened to impose a 50 per cent tariff on its exports, one among the very best rates on any country.
Lesotho’s vibrant textiles industry is the country’s largest private employer, accounting for around 40,000 jobs, but there have been mass lay-offs because the tariffs were first announced. Cuts to the US Agency for International Development have also led to lots of of job losses.
Clothing exports make up a couple of tenth of Lesotho’s $2bn GDP, but the continued turmoil has already damaged a sector with razor-thin margins.
“There are massive lay-offs ongoing,” said Teboho Kobeli, founding father of Afri Expo, one among the country’s biggest garment producers. “Unless [factories] are doing other orders beside US orders, they’re totally shutting down.”
The luckier ones, he said, “are only ending up outstanding orders that were within the pipeline. There are not any latest orders coming in.”
The state of disaster would allow the federal government to bypass standard, time-consuming bureaucratic processes and fast track plans to create 1000’s of jobs in construction and agriculture, Shelile said.
All ministries have been ordered to contribute 3 per cent of their budget right into a $22.2mn fund that will likely be used for youth grants and entrepreneur loans intended to bolster the private sector, he added.
The country has a youth unemployment rate of 48 per cent.
The shifts in US policy when it comes to the way it handles countries like Lesotho were “adding to the wound that was already there for a few years”, said Shelile.
Colette van der Ven, chief executive of Tulip Consulting, which specialises in international trade and sustainable development, said Lesotho contributes only about 0.02 per cent of the US total deficit, meaning a 50 per cent reciprocal tariff “makes zero sense”.
“The garment industry is a highly fragmented value chain, and loads of that value isn’t actually added inside Lesotho,” she added. “If the US really wants to focus on [its] trade deficit, this just isn’t the country to focus on.”
The Trump administration has said it’s working on a “template” it’s going to use to barter deals with African countries.
Speaking from a fashion buyers’ event in Cape Town where Lesotho exporters were showcasing their wares, Shelile said the continued turmoil over tariffs had pressured the federal government into redoubling efforts to diversify its buyer market.
“We’re making inroads into the South African market to sell among the things that might be going to the US.”
But analysts warned that diversification efforts may not provide a straightforward solution, particularly throughout the continent.
“For essentially the most part, other African countries should not consuming the identical products as Americans are,” said Donald MacKay, chief executive of Johannesburg-based XA Global Trade Advisors. “So that you’re not going to exchange the US with Africa.”