Dr Sizo Nkala
AFRICA has suffered a series of blows since Donald Trump’s return to the presidency of the US in January.
First, it was the ruthless liquidation of the United States Agency for International Development (USAID) an entity that had, notwithstanding its shortcomings, come to play an important role in Africa’s development trajectory leading important interventions in healthcare, food security, education, gender justice, and sanitation programmes to mention a few. Its dismantling was a huge setback to the realization of the Sustainable Development Goals in Africa whose 2030 deadline is fast approaching.
The latest blow is the April 2nd announcement of unilateral trade tariffs by the Trump administration which have effectively upended the African Growth and Opportunity Act (AGOA) and jeopardised the growth prospects of several countries in the continent. Aggrieved that the US is being taken advantage of by its trading partners, President Trump unleashed a new wave of tariffs aimed at protecting US industries.
The first category is a 10 percent tariff which will apply to all products but a few products being imported into the US from any country in the world. Thus, all African countries will be affected by this tariff regime.
The second category consists of reciprocal customized tariffs for countries Trump described as the worst offenders. Africa is well represented in the list of the so-called worst offenders with 20 out of the 57 countries on the list being African. Some of the hardest hit countries include small economies like Lesotho, Madagascar, Mauritius, and Botswana whose exports to the US will now be subjected to 50 per cent, 47 per cent, 40 per cent and 37 per cent tariffs respectively.
Some of the continent’s biggest economies will also be affected including South Africa, Nigeria, and Algeria whose tariffs have been set at 31 percent, 14 percent, and 30 percent respectively.
Other countries competing the list with tariffs ranging 12 and 32 percent include Angola, Cameroon, Chad, the Democratic Republic of Congo (DRC), Equatorial Guinea, Ivory Coast, Libya, Malawi, Namibia, Mozambique, Tunisia, Zambia and Zimbabwe.
How the Trump administration arrived at these tariff rates is not entirely clear. The administration officials said they considered several factors including US trade deficit with the individual countries, the level of tariffs, non-tariff barriers and unfair policies such as currency manipulation.
While the impact will be devastating, it will be felt unevenly across the continent. The Southern African region will be the hardest hit by the new US tariff regime with 11 out of the 20 African countries on the list of the worst offenders. Among the individual countries – Lesotho, Madagascar, Mauritius, and South Africa with 20 percent, 16 percent, 11 percent and 9 percent of their total exports going to the US respectively, will be some of the most affected as it places significant revenues at risk.
Further exports to the US make up at least 3 percent of the Gross Domestic Product (GDP) in Lesotho which tops the list at 10 percent, Madagascar at 5 percent, South Africa at 4 percent, and Botswana at 3 percent.
Lesotho has built a thriving apparel industry which depends on exports to the US under AGOA and employs thousands of people. Madagascar and Mauritius have also benefitted from the AGOA arrangement through the export of apparel to the US market.
More importantly, the new US tariffs have effectively nullified the AGOA benefits for African countries as the legislation that forms the legal basis of the tariffs, Section 232 of the US Trade Expansion Act of 1962, allows the US president to adjust trade policies, including imposing tariffs, on grounds of national security.
President Trump did not talk about AGOA during his announcement of the tariffs. But without any specific directive from the Trump administration, it is safe to assume that AGOA benefits will cease with immediate effect.
If Donald Trump had no qualms about cutting off aid for some of the most vulnerable people in the world, he would certainly have no qualms about cutting off a trade agreement (AGOA) that benefits some of the world’s least developed countries.
AGOA has been an integral part of the US-AFRICA relations since its inception in 2000. Under the arrangement, qualifying African countries secured duty-free access to the US market for over 7000 products. This was part of an effort to promote industrialised African economies through trade.
In 2024, the participating countries exported goods worth US$8.4 billion under AGOA. The scheme has been renewed two times previously in 2008 and 2015. It is set to expire in September this year and conversations about its renewal had already begun during the Joe Biden administration.
US Senators Chris Coons and James Risch introduced a bipartisan AGOA Renewal and Improvement Act Bill in April 2024. The Bill suggested that AGOA be renewed for 16 years until 2041.
However, with the way things have turned out thus far in Trump’s first three months in office, it is unlikely that the agreement will be given a new lease of life. African countries would do better to start preparing for life after AGOA.
* Dr. Sizo Nkala is a Research Fellow at the University of Johannesburg’sCentre for Africa-China Studies.
** The views expressed do not necessarily reflect the views of IOL or Independent Media.