Lesotho, a Small African Nation, Expects a Big Hit From Trump’s Tariffs

The nation that the Trump administration has slapped with the heaviest rate of this week is a rural, rural country and without outlet on the sea in southern Africa which is among the poorest in the world.

Lesotho, which produces denim that goes to American brand jeans, has been hit by a 50 %rate. It was among the numerous low -income countries in the continent that were shocked by the samples above the minimum of 10 percent imposed on almost all American commercial partners. Madagascar, where three quarters of the population lives in poverty, will now be welcomed with a rate of 47 % when its clothing, vanilla and other exports will enter the United States.

The products from Algeria, Angola, Botswana, Libya and Mauritius now have rates above 30 percent, as well as South Africa, which has arrived in particular attack by the Trump Administration.

Trump justified rates on the whole edge declaring that the world commercial system has played the United States for a Chump that collected the card for the world’s mooochers.

But Lesotho is certainly not a great player in global trade: he has imported less than $ 3 million in goods from the United States and exported $ 240 million there last year.

The rates come as much of the African continent is already falter. Only weeks ago, the Trump administration has concluded billions of dollars in aid in Africa that have undergone the health systems of many countries and rescue efforts in the event of a catastrophe.

At the same time, governments of the whole continent are facing a load of foreign debt that exceeds $ 1.1 trillion. Many spend more to reimburse their loans than for health care or education.

For the most part, exports made from Africa to the United States are tiny. But for countries like Lesotho, the impact of the rates is enormous. Exports of denim and diamonds represent more than one tenth of the country’s gross domestic product.

This “will devastate the economy,” said Jacques in the head of Africa at Oxford Economics, a research company. Lesotho It is already a poor country. It has a population of two million and all its national production is about $ 2 billion per year, with an annual per capita income of $ 975.

“This has nothing to do with actual rates,” he said in. “They can’t import from the United States much, because they don’t have much money.”

The textile industry is the largest private employer of Lesoteho and produces the number one export. The sector was nourished after the United States has exceeded the Law on African growth and opportunities In 2000 This law expires by the end of the year, although Mr. Trump has actually ended this week.

Lesotho’s factories have created garments, in particular denim, for producers such as Levi’s and Wrangler. And although Mr. Trump recently called Lesoteho a country of which “nobody has ever heard”, his Trump brand golf shirts Greg Norman Functional labels that say “Made in Lesotho”.

The Lesoteho Minister of Commerce, Mokhethi Shele, said that the country has 11 factories that employ 12,000 workers. The seventy percent of what it produces is exported to the United States. “We are a small economy,” said Sheile. “We just have to speak with the American administration because the rate is not based on facts.”

Also other exporters of better fabric exporters to Africa, such as Madagascar (47 percent tariffs) and Kenya (10 percent), will hear the puncture.

Since South Africa makes more exchanges with the United States, exporting cars, agricultural goods and more, will be more affected, said Thea Fourie at S&P Global Market Intelligence.

African nations whose main exports are energy or some critical minerals will be spared because the administration has exempt those articles from rates.

While the United States are imposing rates on the relatively small quantity of goods from Africa – only $ 39 billion last year – China He tried to encourage trade. He has eliminated all the import duties on products from 33 African countries in December.

A greater concern are the chain effects that rates should have on the global economy. The prospects attenuated last week and analysts expect slower growth.

“Even African countries that do not face very high rates will be suffering,” said Jayati Ghosh, economist of the University of Massachusetts in Amherst.

As in the case of any global recession, the poorest countries will feel the most acute effects. The worsening of economic perspectives could slow down trade with other partners such as China and Europe. Investors also discourages.

If inflation pushes central banks to increase interest rates, African countries with large debt charges are in double touch. Their payments of loans – most of which have a price in dollars – will increase at the same time when their ability to earn foreign currency through exports is paralyzed.

Mavis Owusu-Gyamfi, president and CEO of the African Center for economic transformation, said that the only way to follow is to develop regional commercial networks within the continent, a longtime goal.

The continent must look for “opportunities to build intra-African trade,” he said.

Zimasa Matiwane has contributed to reporting from Lesoteho.