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News24
19 hours ago
- Business
- News24
Lesotho at risk of economic collapse after aid cuts, Trump's tariffs
The African Development Bank is urging swift economic diversification, regional trade expansion, and other measures to save Lesotho from economic collapse. In its latest report, the bank says Lesotho's economic growth could shrink to just 0.5% next year. Lesotho is still reeling from a massive loss of funds caused by the Trump administration's sudden termination of aid programmes. US tariffs of up to 50% on textile exports could lead to factory closures and a loss of R1 billion in exports for the small, landlocked country. For more financial news, go to the News24 Business front page. Lesotho is facing economic and public health crises triggered by cuts in foreign aid and harsh US trade tariffs. The small, landlocked kingdom is struggling with high unemployment and fresh job losses. According to an African Development Bank (AfDB) Country Focus Report on Lesotho released last week, the country's economic growth of 2.4% in 2024 is expected to fall to just 1.1% this year and 0.5% in 2026. The report says the slowdown is driven by declining Southern African Customs Union revenues, a decrease in foreign aid, and rising trade-related risks (notably the new, prohibitively high US trade tariffs), and the cancellation of the $300-million Millennium Challenge Corporation second five-year compact. Aid cuts have hit Lesotho's health sector hard. The sudden termination of US aid programs has resulted in the loss of about 1 500 healthcare jobs, according to the report, and has severely undermined efforts in prevention, treatment, and outreach for HIV. Lesotho has one of the highest HIV prevalence rates globally, with over 20% of the adult population living with the virus. What makes these cuts even more damaging is Lesotho's already underfunded health system. The report says Lesotho now has only 21 health workers per 10 000 people, far below the World Health Organisation's recommended minimum of 44. At the same time, Lesotho's key export sector — textiles and apparel — is under threat. The US has imposed a 50% tariff on Lesotho, temporarily reduced to 10% until 1 August. While this reduction offers some relief, AfDB warns that the long-term consequences could be severe. Lesotho's textile industry has long depended on duty-free access to US markets, which make up 47% of its shipments, valued at over $200 million annually, and account for nearly 13% of GDP. The AfDB warns that the tariffs could lead to a 20 to 30% decline in orders, a loss of over R1 billion in exports. 'This could push GDP growth below 1%, especially if factory closures or layoffs increase,' the report says. 'Lesotho may face further declines in investment, factory relocations, and job losses in its already fragile manufacturing sector, which could reduce tax revenue.' The AfDB warns of increased rates of poverty, which, together with inequality, are major issues in Lesotho. Action needed The report warns that without quick and coordinated policy actions, Lesotho could face a surge in social unrest and poverty. The AfDB urges Lesotho to act swiftly. Economic diversification, investing in skills and infrastructure, and expanding regional trade, especially through the African Continental Free Trade Area (AfCFTA), are essential. Tax reform and debt management programmes, supported by AfDB, are already under way. But more action is urgently needed. To keep the textile sector viable, the report recommends improving quality standards, logistics, and worker skills to meet changing global market demands. It also calls for accelerating regional trade efforts under AfCFTA and encouraging entrepreneurship in non-textile industries. 'Lesotho could reorient its production towards regional markets and gradually reduce its exposure to US policy shocks,' the report suggests.
News24
5 days ago
- Automotive
- News24
Volkswagen takes R27bn global hit from Trump tariffs
For more financial news, go to the News24 Business front page. German auto giant Volkswagen said Friday that tariffs imposed by US President Donald Trump had cost it 1.3 billion (R27 billion) euros in the first half of the year as it reported falling profit. Overall net profit fell 38.5 percent year-on-year during the period to hit 7.28 billion euros (R150 billion). Higher-sales of lower-margin electric vehicles (EVs) as well as restructuring costs hit the result in addition to the tariffs, Volkswagen said. Finance chief Arno Antlitz said Volkswagen was nevertheless "on the right track" and that performance was at the "upper end of expectations", if tariffs and restructuring costs are excluded. The firm struck an unprecedented deal with unions last December to cut 35 000 jobs in Germany by 2030 as part of plans to save 15 billion euros a year. The 10-brand group also cut its revenue and profit outlook, warning of "political uncertainty and increased barriers to trade" for the remainder of the year. It now forecasts a profit margin for the year of between 4 and 5 percent, down from 5.5 to 6.5 percent previously, amounting to billions of euros for the firm. The range assumes that the United States will continue to levy tariffs of 10 percent on imported cars in the best case and stick to its current rate of 27.5 percent in the worst, Volkswagen said. Volkswagen's previous guidance, released in April shortly after new US tariffs took effect, did not take the increased duties into account. Sales by volume in North America fell 16 percent "mainly due to tariffs" in the first half even as they rose slightly worldwide, Volkswagen said. Trump in April slapped an additional 25-percent levy on imported cars as part of an aggressive trade policy he says will help boost US manufacturing. That has hit European carmakers. French group Stellantis - whose brands include Jeep, Citroen and Fiat - said on Monday that North American vehicle sales by volume plunged 25 percent in the second quarter of the year. US and European Union diplomats are currently negotiating ahead of the latest deadline set by Trump, with Trump threatening a blanket duty of 30 percent after August 1 if no agreement is reached.
News24
03-05-2025
- Business
- News24
Oil prices may sink even lower as Saudi, Russia throw 'bombshell'
For more financial news, go to the News24 Business front page. Eight OPEC+ member countries on Saturday announced a sharp increase in oil production for the month of June at the risk of driving down already very low prices. Saudi Arabia, along with Russia and six other members of the oil cartel, will implement a production adjustment of 411 000 barrels a day out of the ground, as in May, according to a OPEC+ statement, whereas the initial plan called for an increase of just 137 000 barrels. Numbering a total of 22 countries, most of which are highly dependent on oil, the group had until recently been exploiting supply scarcity to boost prices, holding millions of barrels in reserve. "OPEC+ has just thrown a bombshell to the oil market," Jorge Leon, analyst with Rystad Energy, told AFP. "Last month's decision was a wake up call. Today's decision is a definitive message that the Saudi led group is changing strategy and pursuing market share after years of cutting production," he added. That about-face will also provide an opportunity to build good relations with Donald Trump's United States, he went on. Shortly after taking office in January Trump called on Saudi Arabia, which heads the cartel, to up production in order to bring prices down. Last month the group slightly lowered its forecast for oil demand growth, citing the impact of US tariffs on the world economy. The Organisation of the Petroleum Exporting Countries in 2016 came up with OPEC+ to strengthen their weight on the global market. The eight who have agreed additional increases are Saudi Arabia, Russia, Iraq, the United Arab Emirates, Kuwait, Kazakhstan, Algeria and Oman.
News24
02-05-2025
- Business
- News24
Trouble for Shein, Temu as Trump taxes small parcels, some retailers give up on US
For more financial news, go to the News24 Business front page. As the United States ends a tariff exemption for small parcels on Friday, some retailers have stopped selling to US customers while others are seeking temporary workarounds in the hope the tariff rate may be reduced. The removal of "de minimis" - duty-free treatment of ecommerce packages worth less than $800 - for products originating from China and Hong Kong exposes those goods to tariffs of 145% on most Chinese goods following US President Donald Trump's decision last month, a move that upended global trade and triggered retaliation from Beijing. British beauty products retailer Space NK has paused e-commerce orders and shipping to the US "to avoid incorrect or additional costs being applied to our customers' orders", the company said in a notice on Wednesday. It is not alone. Understance, a Vancouver-based company that sells bras and underwear manufactured in China, told customers in an Instagram post that it would no longer ship to the United States due to the tariffs, saying it will resume once there is clarity. "We're going from zero to 145%, which is really untenable for companies and untenable for customers," said Cindy Allen, CEO of Trade Force Multiplier, a global trade consultancy. "I've seen a lot of small to medium-sized businesses just choose to exit the market altogether," she added. Import charges can vary depending on shipment methods. For goods handled by the US Postal Service, the tariff will be 120% of their value, or $100 per package. The amount is due to increase to $200 in June, according to implementation guidance from US Customs and Border Protection. Players willing to continue to access the US market are forced to hike their price tags. Oh Polly, a British clothing retailer, has increased prices in the US by 20% compared to its other markets, and may have to consider further price increases because of the higher tariffs, said managing director Mike Branney. Singapore-based fast-fashion giant Shein sought to reassure customers in a post on its US. Instagram account on Thursday, saying: "Some products may be priced differently than before, but the majority of our collections remain as affordable as ever." Shein sells clothes mostly manufactured in China, and the US is its biggest market. Temu, the international arm of Chinese ecommerce giant PDD Holdings, prominently featured products already in US warehouses on its website, labelled 'Local', and a pop-up informed customers there would be no import charges for local warehouse items. But items imported before the May 2 change will eventually run out. Both Shein and Temu have slashed their US digital advertising spending in the past weeks as they prepared for the change that is likely to hit their sales. Shein did not immediately reply to a request for comment. Temu did not immediately reply to a request for comment. De minimis was initially introduced to smooth online shopping and boost international trade, but became the target of bipartisan criticism due to its role in facilitating smuggling of fentanyl ingredients from China and fuelling a surge in imports of cheap clothes, toys, and furniture made in China through online platforms like Temu, Shein, and Amazon Haul. De minimis has also been a channel for counterfeit goods. In 2024, de minimis shipments accounted for 97% of the intellectual property infringement-related cargo seizures made by Customs and Border Protection. Without de minimis, sellers of goods made in China have to provide US customs with more detailed information about where each component of their product is made, an increased administrative burden that, along with the huge tariff cost, is dissuading small retailers. UPS CEO Carol Tome said on Tuesday that many of the delivery firm's small to medium-sized business customers source 100% of their goods from China. US online marketplace Etsy said in a notice to sellers earlier this month that it was making it easier for them to clarify the country of origin of their products, as tariffs are applied based on where a good is made rather than where it is dispatched from. While disruptive to ecommerce, the end of de minimis treatment of Chinese goods could give a boost to retailers less reliant on ecommerce or on Chinese manufacturing. British fast-fashion retailer Primark, which sells clothes to US customers only through its stores across the country, not online, said it could benefit from the change. "With prices going up from this part of the trade, I wonder if some Americans might start going back to shopping centres to find value there," George Weston, CEO of Primark owner Associated British Foods, told Reuters on Tuesday.
News24
01-05-2025
- Politics
- News24
Workers' Day: have trade unions lost their way?
Terry Bell remembers the heritage of the Haymarket Martyrs. For more financial news, go to the News24 Business front page. For most trade unions and worker movements around the world, May Day 2025 will be celebrated more with a whimper than a bang. The widespread jubilation, pride and determined optimism of the fairly recent past will be missing as a largely weakened and fragmented labour movement struggles to grapple with 21st Century reality. Times have changed — and are certainly changing ever more rapidly as the proclaimed Fourth Industrial Revolution gathers pace. The future of work and, therefore, the future of trade unions is now uncertain. The gains of recent years — even, in some regions, the gains of many decades — are threatened or are being clawed back. There are also echoes now from over the past century of the rise of authoritarianism fuelled by racist, religious and even linguistic nationalisms, which have morphed in some regions into ethnic cleansing and mass slaughter. The prime sufferers, once again, are the working people, employed and unemployed. And it is the resilience and fortitude of often brutalised and exploited workers who organised to become a bulwark against greater deprivations visited upon the poor and dispossessed that May Day traditionally celebrates. Theirs was a long, hard, and often bloody road that, especially given the present economic and social context, needs to be studied and understood by anyone hoping for a better and more democratic world. In Chicago, in May 1886, a peaceful mass rally of workers who dared to dream of a truly democratic future was attacked by police. That gave us May Day as a celebration of courage and fortitude. And like the "Durban Moment" strikes of February and March 1973, which gave rise to the modern South African union movement, that single event had a history that echoes across the years. In Chicago, four activists, two of them journalists, one a printer and the other a carpenter, became the victims of what is widely described as a legal lynching. They were among the organisers of a rally calling for an eight-hour working day to be introduced. They were arrested and sentenced to be hanged. Seconds before they died together on the gallows, journalist August Spies shouted: "The time will come when our silence will be more powerful than the voices you strangle today." That statement reverberated around the world and, in 1890, the "Haymarket martyrs" were honoured by naming 1 May as the day of labour solidarity. There are many echoes from quite recent local history of that travesty in the United States and the events leading up to it. In our part of the world village, it was a largely democratic, worker-led and militant trade union movement that fought against incredible odds to help bring about the transition that we celebrated this week as Freedom Day. Yet the union movement is weaker today and more fragmented, at a time when the reality of a greedy and exploitative minority dominating and profiting from the labour of the majority is, if anything, clearer than a century ago: the overall social and economic circumstances that gave rise to unity among sellers of labour the world are still present. But what has happened over the past century has been the gradual absorption of much of the labour movement into the profit-driven system. With few exceptions, trade unions have, to varying degrees, lost their way; they have become bureaucratic replicants of the very system they were founded to oppose. At the same time, there is the constant call to "go back to basics". Yet the most basic principle — unity of all workers — is still not widely acted on. This principle was summed up in a poem written in 1820 by Percy Bysshe Shelley after troops killed peaceful worker protesters in England in 1819. The pertinent stanza reads: "Rise, like lions after slumber/ In unvanquishable number!/ Shake your chains to earth like dew/ Which in sleep had fallen on you: Ye are many—they are few!" This idea of the democratic unity of the majority of exploited humanity was even more clearly spelled out 28 years later by Karl Marx and Frederich Engels when they provided the slogan: "Workers of all countries unite!" They added: "You have nothing to lose but your chains." Those chains are still very much still in place and May Day is a time to review this reality. For trade unions, it is not a matter of adapt or die, but rather how organised labour can, may or will adapt as finite resources are plundered, mass murders are sanctioned and the planet becomes increasingly polluted in the cause of private profit. It is a grim outlook. But workers are still organised and there are small, but quite strong signs that new, highly democratic, unions are emerging, often from previously unorganised workers. A return to the basic principles of the labour movement is possible, and it is essential for the sake of the future.
