08/04/25, Trump Tariff Consequences

 During a Congressional address last month, US President Donald Trump described Lesotho as a place “nobody has ever heard of”. Last week, he hit the tiny southern African mountain kingdom with a 50% reciprocal tariff, the highest levy for any sovereign nation. Soon after, the impoverished nation's government said it would send a delegation to Washington.

“We need to urgently travel to the U.S. to engage with its executives and plead our case. My biggest concern was the immediate closure of factories and job losses,” Trade Minister Mokhethi Shelile told reporters Thursday.

He said there are 11 factories in the country and most of them export goods to the US, providing employment to 12,000 workers.

The Trump administration justified this action by citing Lesotho's purported 99% tariff on US goods, a claim disputed by Lesotho's government, saying it doesn't know how the US administration calculated that figure.

Lesotho, a landlocked nation entirely surrounded by South Africa and home to about 2.3 million people, depends significantly on textile exports, especially to the United States. In 2024, Lesotho's exports to the U.S. totalled $237 million, with textiles making up a large share.

Lesotho does not pay tariffs on exports to Botswana, Namibia, South Africa and Swaziland since it is a member of regional economic blocs such as the Southern African Customs Union. Main exports include clothing, diamonds, water, power, wool and mohair.

Its economy

Lesotho's economy is significantly reliant on its exports to the United States, primarily denim and other textiles supplied to major American brands like Levi's and Calvin Klein. According to Oxford Economics, these exports constitute over ten percent of Lesotho's GDP. Notably, even Trump-branded Greg Norman golf shirts bear manufacturing labels indicating production in Lesotho.

Its traditional Basotho blankets are a national symbol and renowned for their vibrant patterns and woolen warmth. They are often loaded with meaning, from celebrating life and nationality, to fertility and royalty, peace, love and courage.

Lesotho's economy has been heavily reliant on textile exports bound for the United States through the African Growth and Opportunity Act (AGOA) trade deal, which provides duty-free access to the U.S. market for some African products. The Trump administration's imposition of tariffs on African nations has raised questions over how likely the White House is to renew the AGOA pact when it expires in September.

According to the Office of the U.S. Trade Representative, in 2024, U.S.-Lesotho bilateral trade stood at $240.1 million. Apart from clothing, Lesotho's exports also include diamonds and other goods.

Classified as a lower-middle income country by the World Bank, nearly half of Lesotho's 2.3 million population live below the poverty line, while a quarter are unemployed.

Economic implications for Lesotho

The imposed tariffs pose a significant threat to Lesotho's textile industry, which is a cornerstone of its economy, employing approximately 30,000 workers. The increased tariffs could lead to factory closures and substantial job losses, exacerbating poverty in a nation where nearly half the population lives below the poverty line.

Economists and analysts have questioned the rationale behind targeting small economies like Lesotho, suggesting that such actions may be politically motivated rather than based on substantial economic considerations.