4 days ago
Lesotho faces major job losses unless Trump's US tariffs are cut even further
Lesotho's tariff has been cut from 50% to 15%, but its garments are still not competitive with those from Eswatini and Kenya, which have been hit with tariffs of 10%.
Lesotho's tariff rate for exports to the US was substantially lowered last week from 50% to 15%. However, even at the much lower rate, the mountain kingdom still faces large job losses, mainly because of competition in garment exports from Kenya and Eswatini, which got an even lower US tariff rate of 10%.
The Lesotho government will this week urgently lobby the Trump administration to lower its rate further to 10% before the 8 August deadline for the new rates to kick in, said David Chen, the chairperson of the Lesotho Textile Exporters Association.
He said Trade and Industry Minister Mokhethi Shelile had assured him on Monday, 4 August that the government was working hard to convince the US to lower the tariff to 10%.
The Trump administration slapped an astonishing rate of 50% on tiny Lesotho in its first announcement of 'reciprocal' tariffs in April, mainly because of the strange way it calculated the rates supposedly needed to correct the trade surpluses of other countries.
If the government failed to bring down the tariff rate, about 14 garment factories — mainly exporting to the US — were likely to close, with job losses of 20,000 to 30,000, Chen told Daily Maverick. The garment industry is Lesotho's biggest source of private sector employment.
Chen added that a 5% tariff disadvantage to his competitors might not seem a lot, but was in fact 'very big'.
He noted that Lesotho had for many years been exporting garments to the US under the African Growth and Opportunity Act (Agoa), which gave eligible countries like Lesotho duty-free access to the US market.
That duty-free rate disappeared under the Trump administration's 'reciprocal 'tariff hikes. But if the Lesotho government could persuade the US to drop that to 10% — the same as other Agoa beneficiaries like Kenya and Eswatini which export garments to the US — Lesotho would remain viable, he said.
Some garment factories, including his own TZICC Clothing, had suspended production for the last few weeks, putting workers on leave, because the uncertainty about tariffs had paused orders.
'Everyone is waiting for certainty about tariffs. Everything is at a standstill. Or at least 90% of business has stopped.'
Chen said 28 Lesotho garment factories were dependent on US exports. They sell to major brands like Levi Strauss and Wrangler. He predicted about half of these factories would close if the US tariff rate remained at 15%.
He said companies like his were seeking other markets, mainly in South Africa, as the orders from markets further away had been too small.
Shelile has been quoted as saying that while several meetings with US trade representatives had led to the tariff reduction from 50% to 15%, more needed to be done to lower it further. DM
