Analysts find Trump’s tariffs on Lesotho completely unjustifiable

Lesotho warns that Trump’s 50% tariff threat risks tanking their textile industry. The country’s trade minister, Mokhethi Shelile, said they’re counting on the US to set a favorable tariff rate, ideally 10% or less. He added that anything higher might drive their textile industry out of US markets or into closure. Lesotho is presently the leading African exporter of garments to the US, supplying major American brands like Levi’s and Wrangler. Yet Trump recently referred to the African country as “a country nobody has ever heard of.” Some of Lesotho’s textile factories are preparing for closure, already cutting down on their workforce President Trump threatened in April to slap a 50% tariff on Lesotho’s exports—one of the steepest rates imposed worldwide—before suspending the move. As the suspension deadline nears, Lesotho still hasn’t secured a trade agreement with the US, meaning it could very well face the tariffs if Trump follows through on his threat. Textile exports contribute 10% to Lesotho’s $2 billion GDP, but the tariff uncertainty has clearly taken a toll on the industry. More than 40,000 people were employed in Lesotho’s textile industry, though mass job cuts began after the tariffs were first announced. Teboho Kobeli, founder of Afri Expo and one of the nation’s garment exporters, confirmed, “There are massive lay-offs ongoing. Unless [factories] are doing other orders besides US orders, they are totally shutting down.” He added that most factories are only working through pending shipments, as no fresh orders have been placed. Taking account of the situation, the country’s government announced a “state of disaster” this week. However, Shelile insists that the state of disaster would remove administrative hurdles and speed up efforts to create thousands of agricultural and construction jobs. He argued that the government could add 60,000 jobs over the next two years. Additionally, he told reporters that ministries will be required to allocate 3% of their budget to a $22.2 million fund to support youth grants and entrepreneurial loans to strengthen the private sector. Currently, at least 48% of the youth population in the country is unemployed. Analysts find Trump’s tariffs on Lesotho completely unjustifiable Some analysts believe the US proposed tariffs on Lesotho are outrageous and could do much harm. Colette van der Ven, chief executive of Tulip Consulting, a advisory firm on international trade, claimed that the African country only accounts for 0.02% of the US total deficit, hence imposing a 50% levy is completely illogical. She argued that with so little value actually added within Lesotho, because of the textile industry’s dispersed value chain, penalizing the country won’t help lower the US trade deficit. Shelile also said that the US tariffs will only exacerbate problems that have plagued them for years. Though he said the country is looking to include more buyers, shifting away from the US market and moving on to countries like South Africa. However, industry experts have cautioned that finding other markets, especially within the African continent, may not be an easy fix to their problems. For instance, Donald MacKay, chief executive of Johannesburg-based XA Global Trade Advisors, explained that since African customers generally don’t purchase the same goods as Americans, replacing the US market with African demand will be difficult. Nevertheless, the US government stressed that it’s developing a “template” to guide future trade negotiations with African nations. President Trump also recently hosted leaders from Gabon, Guinea-Bissau, Liberia, Mauritania, and Senegal to negotiate trade deals. Cryptopolitan Academy: Tired of market swings? Learn how DeFi can help you build steady passive income. Register Now

Source: Cryptopolitan