Global Trade Turmoil: Lesotho Hit with 50% Reciprocal Trade Tariff by US President Trump
Lesotho’s Unfair Target
The tiny southern African kingdom of Lesotho has been hit with a 50% reciprocal trade tariff by U.S. President Donald Trump, the highest levy of any single state on his long list of target economies. Lesotho, a poor and landlocked country with a gross domestic product of just over $2 billion, has a large trade surplus with the United States, mostly made up of diamonds and textiles, including Levi’s jeans. Its exports to the United States, which in 2024 totalled $237 million, account for more than 10% of GDP, Oxford Economics said.
Trump’s Response to Unfair Trade Practices
Trump on Wednesday imposed sweeping new reciprocal tariffs on global trading partners, upending decades of rules-based trade and threatening cost increases for consumers. Trump said the "reciprocal" tariffs were a response to duties and other non-tariff barriers put on U.S. goods. Lesotho charges 99% tariffs on American goods, according to the U.S. administration.
Impact on African Economies
In Africa, the move signalled the end of the AGOA (African Growth and Opportunity Act) trade deal that was supposed to help African economies develop through preferential access to U.S. markets, trade experts said. It also compounded the pain after Trump’s administration dismantled USAID, the government agency that was a major supplier of aid to the continent.
Lesotho’s Response
The government of Lesotho, a mountainous nation of about 2 million people that is encircled by South Africa, had no immediate comment on the trade tariffs on Thursday. However, its foreign minister told Reuters last month that the country, which has one of the highest HIV/AIDS infection rates in the world, was feeling the impact of the aid cuts as the health sector had been reliant on them.
The Formula Behind the Tariffs
The formula used to calculate the U.S. tariffs took the U.S. trade deficit in goods with each country as a proxy for alleged unfair practices, then divided it by the amount of goods imported into the United States from that country. The resulting tariff equals half the ratio between the two, meaning countries such as Lesotho and Madagascar, which import only small quantities of U.S. goods, have been hit with more punitive tariffs than much richer countries.
Conclusion
The 50% reciprocal trade tariff imposed by the U.S. on Lesotho is a significant blow to the country’s economy, which is heavily reliant on its trade surplus with the United States. The move is also a setback for African economies, which were hoping to benefit from the AGOA trade deal. The impact of the tariff will be felt not only by Lesotho but also by other countries that have been targeted by the U.S. administration’s trade policies.
Frequently Asked Questions
Q: What is the purpose of the reciprocal trade tariff imposed by the U.S. on Lesotho?
A: The tariff is a response to the alleged unfair trade practices of Lesotho, which charges high tariffs on American goods.
Q: How will the tariff affect Lesotho’s economy?
A: The tariff will likely lead to a decline in Lesotho’s exports to the United States, which account for a significant portion of its GDP.
Q: What is the impact of the tariff on African economies?
A: The tariff signals the end of the AGOA trade deal, which was meant to help African economies develop through preferential access to U.S. markets.