- African countries said to have ‘very high’ tariffs.
- US imposes 50% tariffs on Lesotho.
- Trump tariffs on Africa feared to shut down AGOA.
US tariffs threaten the wellbeing of African economies but at the same time, Africa trade tariffs remain comparatively high affecting trade growth, this according to the World Bank. According to Ajay Banga, the multilateral lender’s President, developing countries, especially in Africa, need to liberalize trade by lowering their tariffs.
The lender’s President is of the view that many African countries have higher tariffs than advanced economies. “Lowering them (tariffs) could offset the risk of reciprocal import taxes,” he advised.
Mr. Banga pointed out that “global uncertainty, triggered in recent months by U.S. tariffs and retaliatory measures announced by China and other countries is contributing to a more cautious business and economic environment.”
The World Bank president cautions that while the impact of US triggered tariffs varies country by country; “global growth is expected to slow from the level forecast several months ago.”
Banga’s view is in line with the World Bank which said in January that it foresees flat global economic growth of 2.7 percent in 2025 and 2026…the same as in 2024… Developing economies now face their weakest long-term growth outlook in 25 years,” the World Bank warned.
In the same vein, he pointed out that the World Bank cited U.S. across-the-board tariffs of 10 percent, noting that they could reduce the already sluggish global growth in 2025 by 0.3 percentage should America’s trading partners retaliate with tariffs of their own.
“U.S. President Donald Trump has upended the global trading system by imposing a new baseline 10 percent U.S. tariff on goods from all economies, and higher rates for some countries, although those have been paused for 90 days to allow negotiations,” he highlighted.
Banga suggested that countries should negotiate and engage in dialogue on trade issues. “There is also untapped potential in deeper regional integration for developing countries. Countries need to care about negotiating and dialogue. It’s going to be really important in this phase, and the quicker we do it, the better that will be,” he said.
He also called on countries to work with willing partners to keep regional and bilateral trade flowing. “Global trade has nearly quadrupled over the past two decades, with developing countries nearly doubling their share of that trade to two-fifths,” he pointed out.
“Many developing economies still maintain higher tariffs than advanced economies, on the average, several percentage points higher on key imports,” he added, “I think that creates a real risk of reciprocal tariffs and, most importantly, lost competitiveness,” Banga warned.
Broad-based liberalization, along with more efficient border processes, clear rules of origin and less friction, could help offset these risks and actually expand market access. “History shows that more open economies tend to grow faster and they withstand stocks and shocks more effectively,” he cited.
Banga was insistent that the ongoing trade tensions are dampening businesses’ appetite for investment, and further cautioned that it is unclear how long the current paralysis will persist.
The president underlined the caution that global growth is expected to slow from the level forecast several months ago. Banga gave no specific forecast. “If you get to good resolutions through that negotiation that I’m encouraging… then I think you could get through this relatively quickly,” he said.
Banga also siezed the moment to point out that it is critical to note that “foreign aid was intended as temporary help, not a long-term strategy. Developing countries needed to create the right regulatory framework to encourage private sector investments that could boost job creation.”
On that note, he reiterated that the World Bank is continuing its reforms to focus on job creation, noting that some 1.2 billion young people were expected to enter the workforce in developing nations over the next decade, but in that same time, only 420 million jobs are expected to be created.
“That gap is not just an economic issue. I think it’s a global risk, because without opportunity, the forces of fragility, of illegal migration, of instability, these forces grow stronger,” he warned.
Also Read: Vaccines could save them, but 500,000 African children still die every year. Here’s why
US tariffs: Lesotho hardest hit
Claiming that Lesotho imposes a 99 per cent tariff on US goods US president Donald Trump has imposed 50 per cent tariff on the South African country, the highest tariffs imposed on any nation.
The imposition came to effect at the start of April and analysts said the US tariffs have dealt a harsh blow to Lesotho, which Trump mocked as a place ‘nobody has heard of.’
“The Trump administration has imposed a steep 50 per cent tariff on Lesotho, a small, impoverished African nation of two million people,” media reported.
According to analysts, the tariffs will gravely affect Lesotho’s economy, which relies heavily on exports and is said to have a modest Gross Domestic Product (GDP) of two billion USD. “The said tariffs are based on the US trade deficit with each country, divided by the total value of imports from that nation,” details the media report.
Based on this calculation, smaller economies that have limited imports from the US are the most affected. The report cites that Lesotho’s trade surplus with the US is largely driven by diamond and textile exports, including the popular Levi’s jeans.
A South African analyst commented that the levies will kill Lesotho’s textile industry completely and as a result, destroy it economy. “If the closure of factories were to happen, the industry is going to die and there will be multiplier effects… Lesotho will be dead, so to say,” the analyst predicted.
“There’s a lot of panic,” announced Thabo Qhesi, a business expert in the South African nation.
Speaking at a business owners’ meeting, held in Lesotho’s capital, Maseru, he said the most anxious people are those connected to Lesotho’s textile and apparel industries. “The wide spread fear is understandable because about 70 percent of the textile products are exported to the United States.
“They have no option but to close down or relocate to the countries where it would be more profitable to them,” he said pointing out that most Lesotho’s garment factories are owned by Chinese and Taiwanese companies.
