Trump Tariffs: Introduction and Context
The latest blow to international trade and global supply chains has fallen in the form of Trump’s tariffs, where, after assuming the presidency, Trump announced a raft of tariffs on most commodities imported into the USA.
Belying expectations of the pre-election threats of the imposition of significantly higher tariffs being mere bluster, Trump wasted little time in announcing multiple rounds of tariffs, aimed at different countries.
A notable difference between Trump’s first term and now is that tariffs have also been imposed on imports from countries that have traditionally enjoyed good relations with the US and whose political ideologies are aligned, rather than being restricted to countries that have been perceived as competitors or are geopolitically antagonistic.
Canada, Mexico, and the European Union were unexpectedly hit by US tariffs, as were countries like India and some Far East Asian countries.
The trade deficit of the US with each country was one of the primary determinants in calculating the rate of tariff, on top of the flat 10% tariff levied on most imports.
Adding to the uncertainty and volatility was the temporary pausing of tariffs for certain countries and commodities, while retaining them for Chinese imports.
The situation was exacerbated by the imposition of counter-tariffs on American goods by other countries, besides other non-tariff restrictions such as curtailing the supply of Critical Raw Materials (CRMs) to the US.
The current status is that all imports (except certain commodities deemed essential) to the US are subject to a 10% tariff, while the additional tariffs have been kept in abeyance for a period of 3 months (rationale being to allow time for negotiations with each country, wherein they discuss with the US and offer better trade terms, to reduce deficits).
Impact on African Countries compounded by changes to USAID and AGOA
For African countries, the impact of the proposed tariffs has been compounded by USAID reductions and the likely suspension of the Africa Growth and Opportunity Act (AGOA), whereunder several African countries had been granted preferential access to US markets, and which had significantly benefitted the economies of some countries.
Since the beginning of 2025, African countries have been faced with the prospect of trade and economic challenges emanating from the Trump administration’s policy changes.
These changes primarily relate to:
- The imposition of additional or punitive tariffs on countries which are deemed to levy unjustifiably high tariffs on US imports or where the trade deficit is significant.
- AGOA (Africa Growth and Opportunity Act): specifically, regarding extension thereof, upon expiry in September 2025.
- USAID: The steep reductions in USAID funding and activities, while not directly impacting trade and commerce, will through impact on humanitarian and social facets, exerting drag on economic and financial parameters.
While each of them covers a different aspect of US-oriented EXIM trade and access to US markets, there exists a great degree of interdependence and interrelation amongst these, especially Tariffs and AGOA.
Ref the AGOA, while no specific announcements have been made thus far, given Trump’s somewhat inward focussed approach and intense desire to reduce trade deficits (or at least use the threat of tariffs to gain trade concessions), it is conceivable that the AGOA will not continue in its present form, thus directly impacting African economies.
The aggregate impact on individual African countries will depend on the rate of tariffs that will ultimately be applied, the success of their negotiations with the US government for concessions and exemptions, as well as the relative advantage (or disadvantage) vis a vis other African peers that the imposition of tariffs at varying rates will bring about.
The situation could also pave the way for greater cooperation and trading relations with other major economies/ trading blocs, such as China, Middle Eastern countries, India, and the European Union, as well as providing an incentive for engaging in intra-African trade.
US-Africa Trade
At the overall level, the US is more important to Africa than vice versa, when purely viewed in terms of the value of trade.
The US imported $39 billion worth of goods in 2024, roughly equal to what it imports from Mexico or Canada in just over a month ($480 billion and $510 billion from Mexico in 2023 and 2024 respectively, while for Canada, the corresponding numbers were $419 billion and $412 billion respectively).
The US imports more from either Mexico or Canada (over 1 billion a day) than it does in the entire year from about 40 African countries.
Africa, however, deserves considerable importance due to its richness of minerals and consequent geopolitical implications (including competing with China’s established dominance, for influence in the region and controlling the supply of CRM’s).
The impact of the tariffs has to be viewed in conjunction with the trade profile and AGOA benefits, since the resultant trade deficit was considered while calculating the incremental tariffs.
Countries like Lesotho, which, though extremely small, have benefited considerably from AGOA, and in percentage terms have a high trade surplus with the US (as their exports have grown under the AGOA scheme, while their small size means that their imports are limited). Therefore, Lesotho was hit with a 50% tariff, the highest amongst all African countries.
Even if the reciprocal tariffs return, AGOA beneficiaries could still enjoy a relative advantage over other countries (if the scheme is extended) since all countries will face extra tariffs.
Similarly, countries which are subject to lower tariffs will gain a relative advantage over countries facing higher tariffs.
An example of the latter is clothing producers like Lesotho, Madagascar and Mauritius, where if higher tariffs are re-imposed, they will be at a major disadvantage vis-à-vis a country like Kenya, which got the 10% baseline tariff.
From the American perspective, economists have warned that Trump’s tariffs on African countries make little sense and will harm U.S. consumers. Because the continent exports mostly raw materials instead of finished products, tariffs will drive up the costs of goods in the United States, including jeans, ice cream, and chocolate.
Impact of Tariff Rate Changes on Countries in Africa
South Africa
South Africa is expected to be amongst the hardest hit African countries, having had disputes with the US on certain issues, compounding the impact of tariffs and possible revocation or curtailment of AGOA benefits.
These disputes include land policies supposedly discriminatory to the minority white population and their stand against Israel in the ongoing Gaza conflict.
South Africa has a $9 billion trade surplus with the US, so both exclusion from AGOA and levying of 10% (or more) tariffs are possible.
South Africa is amongst the top US trading partners in Africa, exporting precious stones, steel products, and cars (mainly from BMW South Africa), with over half of exports being precious metals, diamonds, jewellery and platinum. US exports to South Africa include crude oil, electrical goods and aircraft.
According to the US government, South Africa charges a 60% tariff on US goods.
Tariff levied on South Africa was 30% (31% in some reports), while it is also impacted by the separate 25% tariff on all foreign-made cars (South Africa exports vehicles and parts worth $2bn to the US under AGOA)
Because of South Africa’s commodity mix and volumes, it will be affected in some areas, such as cars (its biggest export), while commodity exports will likely be exempted.
South Africa is staring at a potential loss of US$3.567 billion worth of mainly automobile and agricultural annual exports under AGOA (as of 2023) will take off approximately 0.3% from GDP.
At a broader level, this will drive inflation, impact employment levels, influence interest rate policy, and weaken its equity markets and currency valuation.
Certain parts of South Africa, especially in the Western and Eastern Cape regions, could face job losses, particularly in the automobile export industry, while wine and fresh produce will feel the initial impact, with Citrus Growers’ Association of Southern Africa warning that tariffs could jeopardise 35,000 citrus-related jobs.
South Africa is expected to get some respite due to the fact that CRM imports are likely to be exempted.
Lesotho
A small country, surrounded by South Africa, Lesotho was, to the surprise of most analysts, hit with the highest tariffs globally of 50%.
It was among the biggest AGOA beneficiaries, having developed its textiles industry to capitalise on AGOA concessions.
The US is Lesotho’s second-largest trading partner (after South Africa). It exported US$237.3 million to the US in 2024 (mainly textiles under AGOA and diamonds) and imported US$2.8 million from the US (largely because it imports almost all its requirements from neighbouring South Africa), creating a large trade deficit.
Lesotho imposes zero or very little tariffs on US imports, while the US government states that Lesotho charges a 99% tariff on US goods.
The textile industry is the biggest private employer and also its number one export, where these tariffs are expected to cost 12,000 jobs, representing 42% of total employment in the country’s textiles sector, and close 11 factories that supply to the American market
Clothes make up nearly 75% of Lesotho’s exports to the US, and exports of denim and diamonds make up over 10% of GDP, with its garment factories producing jeans for major US brands like Levi’s and Wrangler.
The impact is expected to be inordinately higher, as the extra costs that the tariffs will incur for American buyers could reduce demand.
2018 World Bank scenario modelling showed that loss of AGOA privileges would “reach 1% of GDP” within 2 years.
Madagascar
Madagascar is another small country hit by high tariff levels.
Its exports to the US in 2024 were worth $733.2 million (mostly textiles under AGOA), and imports valued at $53.4 million, creating a large trade deficit.
Per the US government, Madagascar charges a 93% tariff on US goods, which, combined with the trade deficit, attracts a 47% tariff, applicable to its main exports of apparel and vanilla.
The high tariff rates could potentially wipe out its textile industry, at a cost of 60,000 jobs and have a significant impact as 75% of its population lives in poverty.
Kenya
Kenya is subject to the minimum/ base tariff of 10%.
It’s 50% tariff, and what USTR has termed as ‘burdensome regulatory requirements’ on US corn imports were cited as reasons for imposing the tariff.
Kenya is expected to adjust its trade polices to align with the US’ description of unfair trade policies, to avoid the imposition of higher tariffs
Kenya exports clothes to the US, and with a lower tariff of 10%, Kenya will be in a comparatively advantageous position, as incremental costs due to tariffs will be lower than those of regional competitors.
Zimbabwe
Zimbabwe exported $67.8m worth of ferroalloys, tobacco and sugar in 2024, while importing $43.8m worth of tractors and other goods during the same period.
It was slapped with an 18% tariff.
Nigeria
Nigeria has been accused by the USTR of ‘unfair trade practices’ related to a longstanding import ban on 25 product categories, and is subject to 14% tariffs.
Amongst the top US trading partners on the continent, crude petroleum, mineral fuels, and gas products account for over 90% of its exports to the US, while imports mostly comprise vehicles and machinery
Nigeria’s Central bank sold nearly $200 million to stabilise the naira, as market reactions caused oil prices to plunge.
Tariffs will compound the cost-of-living crisis that has led to high levels of poverty.
Tanzania
While Tanzania is subject to the base tariff rate of 10%, the impact is expected to be limited as the US is not one of its top 5 trade partners.
Its key exports to the US are coffee, tobacco, spices, textiles, minerals, while imports from the US include machinery, medical equipment, and vehicles.
Indirect impact could be felt in the form of a global slowdown, potentially reducing export revenues by 1–2% (coffee/ minerals), while Capital goods (e.g., machines) could become 10–15% more expensive due to higher U.S. prices.