Lesotho, the leading African exporter of textiles to the US, is facing the threat of increased tariffs from President Trump, which could cut jobs and close factories.
Tariff Threat and Its Consequences
President Trump recently threatened to impose a 50% tariff on exports from Lesotho, one of the highest tariffs worldwide. The country's trade minister, Mokhethi Shelile, stated that tariffs above 10% may drive Lesotho's textile industry out of US markets or cause factory closures. Currently, over 40,000 people are employed in the textile sector, with many factories already beginning layoffs.
Government Measures in Lesotho
This week, the government of Lesotho declared a 'state of disaster'. Shelile argued that this would help remove administrative hurdles and expedite the creation of new jobs in agriculture and construction. The government aims to create 60,000 jobs over the next two years and will allocate 3% of its budget to support youth grants and entrepreneurial loans to strengthen the private sector.
Situational Analysis and Future Outlook
Analysts find the proposed US tariffs on Lesotho unjustifiable and potentially harmful. Colette van der Ven, CEO of Tulip Consulting, claimed that Lesotho accounts for only 0.02% of the US total deficit, making the 50% levy illogical. Shelile indicated that the country is looking to attract more buyers, shifting away from the US market toward countries like South Africa, although experts warn that this transition may not be smooth due to differing consumer demands.
In conclusion, Lesotho's textile sector remains at risk due to uncertainty around tariffs. The government is taking measures to create new jobs, but the future of its exports and market stability remains uncertain.
