US slaps Lesotho with 50% tariff

Thousands of local textile jobs in jeopardy

RETHABILE MOHONO

MASERU – The United States President, Donald Trump, has imposed reciprocal tariffs on goods from Lesotho, increasing them from zero to 50 percent. In a media briefing following the announcement, the Minister of Trade, Industry, and Business Development, Mokhethi Shelile, revealed that this development comes as Lesotho was in the process of negotiating the extension of its African Growth and Opportunity Act (AGOA) benefits.

The abrupt tariff hike has raised concerns, as Lesotho was preparing to send a delegation to the US to discuss trade matters.

A reciprocal tariff is a tax or trade restriction that one country places on another in response to similar actions taken by that country. The idea behind reciprocal tariffs is to create balance in trade between nations.

If one country raises tariffs on goods from another, the affected country might respond by imposing its own tariffs on imports from the first country. This response is meant to protect local businesses, preserve jobs, and fix trade imbalances.

Shelile explained that Lesotho primarily exports three main products to the US, trout, apparel and car seats.

“These industries are vital to the country’s economy, with approximately 11 industrial firms exporting to the US and employing around 12 000 workers, most of whom are women, particularly in the Ha Thetsane Industrial Area,” he said, adding the with the new tariffs in place, there is growing concern that jobs might be at risk.

He emphasized the urgency of engaging in discussions with US trade executives to address the issue.

Explaining the tariffs imposed, Shelile said initially, a 10 percent baseline tariff was introduced, reflecting trade performance between the two countries and then an additional 40 percent was then applied, bringing the total tariff to 50 percent.

The 10 percent tariff will take effect on April 5, while the additional 40 percent will be implemented on April 9.

Breaking down the 99 percent deficit and the 50 percent tariff, the minister said the 99 percent trade deficit represents the trade imbalance between Lesotho and the US. Lesotho exports goods worth approximately USD 240 million to the US, whereas the U.S. exports only $3 million to Lesotho, which accounts for just one percent of the trade volume.

“This vast difference led to the US imposing a reciprocal tariff of 50 percent,” he said adding that Lesotho needs to act swiftly and hold meetings with US executives about this matter, while also strengthening the relationship between the two countries.

On the other hand, he stressed the importance of diversifying Lesotho’s export markets beyond the US.

“We should not rely solely on the US market,” Shelile emphasized. He pointed out that South Africa exports globally and that Lesotho should focus more on domestic and regional trade within the Southern African Customs Union (SACU), where South Africa plans to source 80 percent of its goods locally, thus Lesotho to take advantage of that.

“Over the past months, around 10 firms have reopened or expanded their operations, but only one of these firms exports to the US. As a result, the tariff increase could disproportionately affect businesses reliant on American markets,” he said.

For now, he said goods already in transit to the US will not be affected by the new tariffs, but those still in production could face severe consequences.

“Starting from today, the expectation was that industrial workers will begin losing their jobs. However, we have taken steps to ensure they continue working while we address the issue,” Shelile reassured.

Despite the challenges, Lesotho’s Minister of Foreign Affairs and International Relations, Lejone Mpotjoane, during the same press conference emphasized that the country still maintains strong relations with the US.

“The 99 percent figure reflects a trade deficit, not a breakdown in relations. The US is simply prioritizing its own economic interests,” the minister said.

As Lesotho navigates these new trade barriers, the focus now shifts to diplomatic engagement and exploring new trade opportunities to safeguard jobs and economic stability.