Introduction: A New Shock to Global Trade—and to Africa
The latest shock to international trade arrived with sweeping U.S. import tariffs announced shortly after President Trump took office, defying expectations that pre-election threats were mere rhetoric. Multiple rounds targeted a broad array of partners—including longstanding allies—while additional measures were temporarily paused for select countries and commodities. For Africa, the economic strain is magnified by sharp reductions to USAID programs and the prospect that the Africa Growth and Opportunity Act (AGOA) will not be renewed when it expires in September 2025. The combined effect: a destabilizing mix of higher trade costs, diminished preferences, and uncertainty around market access.
The Tariff Regime: Design, Scope, and Moving Parts
Unlike the first Trump term, the new tariffs extend well beyond perceived geopolitical rivals to include Canada, Mexico, the European Union, India, and parts of East Asia. A 10% baseline tariff now applies to most U.S. imports, with additional country-specific surcharges keyed to bilateral trade deficits; those surcharges have been placed in abeyance for three months to allow negotiations. At the same time, some countries face counter-tariffs on U.S. goods and non-tariff restrictions, such as curbs on Critical Raw Materials (CRMs) destined for the United States.
Why Africa Matters—Even if the Trade Volumes Don’t
Measured purely by value, Africa is a small slice of U.S. trade. The United States imported $39 billion in African goods in 2024—roughly what it buys from Mexico or Canada in just over a month. Yet the continent’s significance is outsized because of its mineral wealth and strategic role in global CRM supply chains. Any U.S. policy that alters Africa’s export incentives—and the economics of processing CRMs locally versus shipping raw materials—has implications for geopolitics and industrial policy far beyond the headline numbers.
Economists also warn the tariffs could boomerang on U.S. consumers. Because Africa exports many inputs and commodities, higher duties can lift prices of everyday goods—jeans, ice cream, chocolate—across American shelves.
AGOA and USAID: Two Force Multipliers—In Reverse
- AGOA, introduced in 2000 and renewed in 2015, currently grants duty-free access to 1,800+ products from 32 eligible sub-Saharan countries and underpins two-way trade that totaled $47.5 billion in 2023. Its scheduled expiry in September 2025 now looms large.
- USAID reductions may not directly rewrite tariff schedules but will strain social and humanitarian programs, forcing budget reallocations that crimp infrastructure and development spending—and, by extension, trade competitiveness.
Given the new tariffs, AGOA’s benefits have already been partly neutralized. If AGOA lapses or is curtailed, the erosion of preferences could accelerate factory closures and job losses in smaller, export-reliant economies.
Country-Level Impacts: Divergent Exposures
South Africa
- Trade surplus with the U.S. (~$9 billion) and policy frictions heighten risk of AGOA curtailment alongside tariffs.
- Reported U.S. tariff: 30% (31% in some accounts), plus a separate 25% duty on foreign-made cars—vital given automotive exports (BMW SA) and parts shipped under AGOA.
- Potential loss: $3.567 billion in annual exports (2023 basis), shaving roughly 0.3% of GDP, with knock-on effects for inflation, jobs, markets, and the rand.
- Citrus, wine, and fresh produce face immediate pressure; the Citrus Growers’ Association warns of 35,000 jobs at risk. CRM-linked exports may see exemptions, tempering the blow.
Lesotho
- Hit with the world’s highest tariff: 50%.
- A standout AGOA beneficiary in textiles, exporting $237.3 million to the U.S. in 2024 (jeans for major brands) versus $2.8 million in U.S. imports.
- Tariffs threaten 12,000 jobs—about 42% of textile employment—and could shutter 11 factories tied to the U.S. market. Earlier World Bank modeling (2018) suggested loss of AGOA could cut ~1% of GDP within two years.
Madagascar
- 2024 exports to the U.S.: $733.2 million (mainly apparel, plus vanilla) against $53.4 million in imports.
- Reported duty: 47%, reflecting a large bilateral deficit and alleged 93% tariff on U.S. goods.
- Risk: a near-existential shock to its textile industry, jeopardizing ~60,000 jobs in a country where ~75% live in poverty.
Kenya
- Assigned the base 10% tariff, with U.S. concerns over a 50% duty and “burdensome” rules on U.S. corn noted as context.
- Relative winner among African apparel exporters: with a lower duty burden than peers, Kenya’s textiles retain a cost advantage—provided it aligns trade policies to avoid surcharges.
Zimbabwe
- 2024 exports to U.S.: $67.8 million (ferroalloys, tobacco, sugar); imports: $43.8 million (tractors and other goods).
- Tariff: 18%. Government has suspended tariffs on U.S. goods to facilitate expanded American imports domestically.
Nigeria
- Tariff: 14%, amid U.S. claims of unfair trade practices tied to a long-standing ban on 25 product categories.
- Exports to U.S. dominated by crude and gas (>90%); imports: vehicles and machinery.
- Currency pressure persists; the Central Bank reportedly sold ~$200 million to stabilize the naira. Tariffs risk compounding a cost-of-living crisis.
Tanzania
- 10% base tariff; limited direct impact because the U.S. is not a top-five partner.
- Exports: coffee, tobacco, spices, textiles, minerals; imports: machinery, medical equipment, vehicles.
- Indirect effects include a potential 1–2% hit to export revenues (global slowdown) and 10–15% higher prices for U.S. capital goods.
Negotiations First, Retaliation Last: How Capitals Are Responding
Most African governments lack the scale to counterpunch with U.S.-style tariffs. The immediate playbook is diplomacy and differentiation:
- South Africa is lobbying to underscore its limited U.S. auto market share—0.99% of vehicle imports and 0.27% of parts—arguing minimal threat to U.S. industry.
- Lesotho plans a U.S. delegation, exploring regional trade expansion, potential U.S. wheat purchases, and U.S. stakes in power projects.
- Madagascar is in direct contact with U.S. authorities.
- Zimbabwe has paused tariffs on U.S. goods to spur bilateral flows.
- Nigeria is diversifying export markets to spread risk.
- Kenya dispatched envoys while asserting it will be less affected than Asian textile rivals, preserving a competitive edge.
- Others seek meetings, alternative buyers, or import shifts toward U.S. goods to help rebalance deficits.
Strategically, many are also accelerating intra-African trade under AfCFTA, while deepening ties with China, the Middle East, India, the EU, and other Global South partners to dilute U.S. dependence.
AGOA’s Uncertain Future—and the “Reciprocity Paradox”
AGOA’s track record is uneven: a few countries (notably South Africa, Lesotho, Madagascar, Eswatini, Kenya) leveraged preferences to scale textiles, steel, and agriculture, while others struggled with rules of origin and compliance. A paradox of the current tariff policy is that top AGOA beneficiaries were hit hardest, precisely because duty-free access helped them generate trade surpluses with the U.S., triggering “reciprocal” duties under the new regime.
If AGOA lapses, the hole will be largest for small, apparel-reliant economies—and for sectors where scale, certification, and packaging standards favor larger players. Even if reciprocal tariffs elsewhere return, AGOA countries may retain relative advantages—if preferences survive in some form and if their tariff rates remain below those of regional rivals.
Outlook: From Pain to Reconfiguration
In the near term, African economies face higher export costs, job losses, weaker FX earnings, and tighter household budgets. Secondary effects—slower global growth and softer demand—amplify the hit. USAID cuts add fiscal pressure, crowding out investment. Over time, however, several dynamics could mitigate the damage:
- Trade Diversification: Greater South-South flows and stronger links to China’s BRI and Gulf investors (UAE, Saudi Arabia, Turkey) in ports and infrastructure.
- Supply-Chain Realignment: A gradual re-routing of trade and regional value-chain build-out within Africa.
- Value-Addition at Origin: Incentives to process CRMs and move up the manufacturing ladder rather than exporting raw materials.
- Demographics and Growth: Favorable population trends and comparatively high growth potential support medium-term resilience.
- Relative Winners: Countries with lower tariff bands—for example, Kenya in textiles—may retain sectoral advantages despite higher costs.
Conclusion: Negotiation Now, Diversification Next
Trump’s tariffs, potential AGOA suspension, and USAID reductions together represent a systemic shock for African exporters. The immediate response is negotiation—to cap tariff exposure, protect critical sectors, and salvage preferences. The longer-term project is diversification: of markets, products, and partners, alongside deeper intra-African integration.
The transition will be painful, particularly for smaller, preference-dependent economies. Yet Africa’s resource base, demographics, and industrial ambitions position it to adapt. As trade flows reconfigure and regional supply chains deepen, the continent can convert short-term dislocation into a more balanced, resilient trading posture—less vulnerable to policy whiplash from any single partner and better aligned with its own development goals.