US Tariffs Unleash Crisis in Lesotho's Denim Sector

Lesotho's denim manufacturing industry, a cornerstone of the small southern African nation's economy, is grappling with a severe crisis following the imposition of tariffs by US President Donald Trump's administration. The tariffs, initially set at a staggering 50%, have led to widespread job losses, factory closures, and significant economic instability in a country already facing high unemployment and poverty.

Tariff Imposition and Reduction

In April 2025, the Trump administration announced a 50% tariff on imports from Lesotho, marking the highest tariff levied on any country at the time. The move was framed under the banner of 'reciprocal tariffs,' with the US claiming Lesotho imposed a 99% tariff on American goods, a figure that Lesotho officials have disputed. President Trump reportedly referred to Lesotho as a country 'nobody has ever heard of' when announcing the measures. This initial tariff sent shockwaves through Lesotho's textile sector, which is its largest private employer.

Following a period of intense negotiation and a 'pause,' the tariff was subsequently reduced to 15% in August 2025. However, even at this reduced rate, Lesotho's textile industry remains at a competitive disadvantage compared to regional rivals like Kenya and Eswatini, which face a 10% tariff. Lesotho's Trade and Industry Minister, Mokhethi Shelile, stated that the reduced rate still renders the sector uncompetitive.

Devastating Economic and Social Impact

The tariffs have had a profound and immediate negative impact on Lesotho's economy. The textile industry, which accounts for nearly 10% of the country's GDP and employs between 40,000 and 45,000 workers, has seen American buyers cancel approximately 80% of their orders. This has directly resulted in significant job losses, with initial reports indicating 13,000 jobs lost, representing more than a third of the industry's workforce. Other estimates suggest that up to 12,000 jobs are at risk, with some warnings of 20,000 to 30,000 potential job losses if the tariffs persist at uncompetitive levels.

Companies like Afri-Expo Textiles, which once envisioned significant expansion, have been forced to lay off hundreds of workers. The crisis has led to numerous factory closures and suspensions of production lines across the country. Lesotho, a landlocked nation with a population of just over 2 million, already faced a 25% unemployment rate and nearly half its population living below the poverty line. In response to the escalating economic hardship, Lesotho declared a two-year state of disaster in July 2025.

AGOA and the Path Forward

The imposition of these tariffs has also cast a shadow over the African Growth and Opportunity Act (AGOA), a US initiative designed to provide duty-free access to the US market for eligible African products. AGOA, which was set to expire on September 30, 2025, has been a critical component of Lesotho's trade relationship with the US, enabling its textile sector to flourish and supply major American brands such as Levi's and Wrangler.

While the US has indicated plans to extend AGOA by one year, the uncertainty and the current tariff regime continue to undermine the benefits of the program for Lesotho. Minister Shelile has emphasized the need for further negotiations with the US government to achieve a tariff rate of 10% or even zero to restore competitiveness. In the interim, Lesotho is actively exploring alternative export markets in Asia and within the Africa Continental Free Trade Area to diversify its economic reliance and mitigate the ongoing impact of the US tariffs.