How US tariffs rattled Lesotho's apparel sector

Lesotho’s manufacturing sector has long been regarded as one of its most promising economic pillars, with textiles and apparel leading the charge. Alongside industries like footwear, food, and beverages, textiles have emerged as the dominant force—providing jobs, foreign exchange, and a sense of industrial identity for the small, landlocked southern African nation.

Over the past two decades, Lesotho has carved out a niche for itself in the realm of garment manufacturing and export, thanks in large part to the African Growth and Opportunity Act (AGOA). The trade deal granted duty-free access to US markets for eligible Sub-Saharan African countries, and Lesotho made the most of it.

By 2024, Lesotho had become the second-largest exporter by value under AGOA and the third largest by volume, almost entirely driven by its textile and garment shipments, as per reports, which added that the industry racked up $237.3 million in exports to the United States that year, a remarkable figure for a nation of just over two million people.

Thousands of workers, most of them women, found stable employment in the sector, stitching garments destined for shelves across America. For a while, Lesotho’s economic narrative was one of steady progress and global integration.

But that story took a jarring turn after US President Donald Trump slapped a staggering 50 per cent tariff on Lesotho’s exports, only to reduce it to 15 per cent after a 90-day pause. But the looming threat of a 50 per cent tariff after the expiry of the 90 days sent shockwaves through the country’s economy, particularly its textile sector, as widespread uncertainty and concern gripped one of Sub-Saharan Africa’s top garment exporters.

Spooked by the looming threat of steep tariffs, American importers had already begun cancelling orders en masse, wary of escalating costs and growing uncertainty. Factory floors, once buzzing with activity, fell silent. The very lifeblood of Lesotho’s manufacturing sector began to drain away.

Layoffs followed, disproportionately affecting women who formed the backbone of the workforce, and the crisis escalated so quickly that the government was forced to declare a two-year state of disaster, citing a dramatic surge in unemployment over the country’s “high rates of youth unemployment and job losses” amidst uncertainty over US tariffs. For many families, livelihoods that had taken years to build disappeared almost overnight.

Although following the 90-day pause and considerable backlash, Trump eventually set the tariff at 15 per cent, it came too late for many businesses that had already borne the worst of the impact. Adding to the complexity, some neighbouring countries, considered Lesotho’s competitors, were offered tariffs lower than 15 per cent.

Trade Minister of the country did not mince words when he addressed this issue.

Interacting with the media, the minister reportedly underlined that the 15 per cent tariff for the textile industry was as good as 50 per cent, as he highlighted the impossibility of competing with regional players like Kenya and Eswatini, who continue to enjoy a lower 10 per cent tariff.

“Those are our direct competition,” the minister reportedly claimed, capturing the sense of frustration that has gripped the sector.

In global trade, where the difference of a few percentage points can determine profitability, even a marginal tariff can mean the loss of business to more cost-effective alternatives. What this episode lays bare is just how vulnerable smaller economies are to shifts in global policy, especially when their fortunes are tied so heavily to a single export market.

ALCHEMPro News Desk (DR)