New tariffs imposed by the US are raising concerns about the potential impact on African economies, particularly those with close trade ties to the US. Countries like Lesotho and Madagascar, which export hundreds of millions of dollars’ worth of goods, tax-free, to the US under the African Growth and Opportunity Act (AGOA), are particularly vulnerable.
The US has imposed tariffs of 50% on goods from Lesotho and 47% on goods from Madagascar.
According to the BBC’s Africa regional editor, Will Ross, the clothing industry in Lesotho is its largest employer, and factories across Africa employ thousands of workers who make clothes for the US market. Much of the raw material used in these factories comes from China. The tariffs, therefore, could have a dual impact, potentially harming both African economies and Chinese trade.
The UK government is also considering retaliatory measures against the US. Business and Trade Secretary Jonathan Reynolds told the UK Parliament that a consultation with businesses is underway to assess the potential impact of such measures.
Reynolds stated that while the UK believes a deal with the US is “possible” and “favourable,” the government is preparing for all eventualities. “To enable the UK to have every option open to us in future, I am today launching a request for input on the implications for British businesses of possible retaliatory action,” he said. The government will seek stakeholder views until May 1st on which US products could be targeted with tariffs.
The UK is now facing a 10% tariff on all goods exported to the US. This could lead to price increases for UK consumers or potentially affect jobs, particularly in sectors like car manufacturing, where over 25,000 jobs could be at risk. The situation could also influence UK interest rates, which are currently at 4.5%.
The potential trade conflict has raised fears of a global trade war, with significant implications for economies worldwide.
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