From nowhere, the tiny mountain kingdom of Lesotho has been catapulted onto the front pages of global newspapers, courtesy of the leftfield decision by US President Donald Trump to slap the country with a 50% import tariff.
Even Trump battled to find it on a map, raging a few weeks earlier to Congress that the US had spent $8m to “promote LGBTQI+” in Lesotho, a country of just 2.3-million people that “nobody has ever heard of”.
While Trump on Wednesday put this tariff on pause for 90 days – reducing all global tariffs to 10% for everyone but China – the threat has caused chaos in a country that not only makes denim for Levi’s and Wrangler, but also reportedly makes Trump’s own golf shirts.
A 50% levy would be “an absolute disaster for the country”, Nick Jonsson, the CEO of one of Lesotho’s big textile success stories, Jonsson Workwear, tells Currency.
Jonsson says about 12,000 of the country’s 38,000 garment workers could lose their jobs and 100,000 people would be plunged into poverty if Lesotho can’t negotiate a deal.
The scale of the potential disaster is hard to overstate.
Nearly 100% of Lesotho’s exports to the US last year – amounting to $237m – was textiles. This is immense for the kingdom, amounting to more than 10% of its R2.1bn annual GDP (which is far, far less than the US’s $27.2-trillion).
In return, Lesotho – where per capita GDP is just $916 versus the US’s $82,769 – imported just $2.8m worth of goods from the US in 2022 in pharmaceuticals, household appliances and rubber products.
It is this discrepancy, between imports and exports, which is the basis of Trump’s umbrage. This peculiar reciprocal equation between imports and exports, which Trump claims is “unfair”, has left classical economists scratching their heads.
Nonetheless, unless Lesotho can convince Trump otherwise, the prospect of a 50% tariff being imposed when the 90-day pause ends is devastating for the garment sector, which sustains the country’s economy.
Trump has spun his U-turn, and the decision to “pause” the tariffs for 90 days, as due to the fact that “more than 75 countries” have come to his door to strike a deal to avoid these tariffs.
More likely, Trump blinked, panicked by the carnage on the stock markets and the fact that his own advisers – Elon Musk and Peter Navarro – are at loggerheads over the tariffs.
Jonsson says these tariffs are a “bullying” tactic, designed to force Lesotho and other countries to the negotiating table.
If so, the bully seems to be winning.
‘Give us your deportees’
In its haste to cut a deal with Trump, Lesotho is reportedly offering up everything short of its citizens’ first-born children – including, it seems, a deal for Musk.
According to a state department memo from the US embassy in Maseru, obtained by investigative journalists at Mother Jones, high-ranking Lesotho officials pledged to buy more goods from the US, and apparently even offered assurances that the country would soon allow Musk’s Starlink an operating licence.
The memo, titled “Lesotho Urgently Seeks Deal to Reduce Tariffs”, reported back to Washington about meetings held between Lesotho’s government ministers and America’s chargé d’affaires in Maseru in the wake of the tariff shock.
It said that Lesotho’s garment sector had been a “success story” of the African Growth and Opportunity Act (Agoa), but given the massive wealth differential between it and the US, there was little chance it would ever be able to reduce the trade deficit – the amount by which its exports to the US exceed its imports.
“The ministers emphasised that as a least-developed country, Lesotho’s ability to increase imports from the United States were limited, but they pledged to ‘do their best’ to address the trade deficit,” the memo said, according to Mother Jones.
To “demonstrate opportunities for US business”, Lesotho said it is “finalising a licensing agreement for Starlink, with the goal of having a signed agreement by April 15”, according to the memo. This deal is “essentially complete”, it said.
More remarkably, the memo said that Lesotho’s foreign minister had said the kingdom would even “explore accepting … deportees from the United States”.
This disturbing suggestion comes after the Wall Street Journal last week said several countries – including Eswatini – were considering accepting immigrants deported from the US who would not be accepted by their home countries. Others include Libya, Rwanda, Benin, Moldova, Mongolia and Kosovo.
This is an offer that illustrates the desperation in Lesotho to avoid a 50% tariff.
The small and vulnerable African nation pivoted to textile production in the early 2000s thanks to the introduction of the once expansionist US-engineered Agoa, which granted 32 countries on the continent duty-free access to US markets.
Jobs crisis loading
While trade experts say the tariffs would effectively doom Agoa, it’s a cruelly anxious time for manufacturing businesses like Jonsson’s Workwear that have to ensure their survival in a global trading order in complete flux.
Jonsson says the impact on the economy would be immense, adding that “for each job, there [are] six to eight people living off it probably”.
This is critical since, as the US embassy memo pointed out, 39% percent of Lesotho’s youth are unemployed already.
Jonsson’s Workwear – a regional giant on an upward trajectory – is a rare success story in an African textile sector that has been decimated by cheap Asian imports. Initially known only for its workwear, it is increasingly seen as a fashion brand in its own right, and its expansion into the sporting world has earned it household brand status, with huge rugby and golf sponsorship deals.
It also has major influence in Lesotho, employing more than 4,000 people, and investing heavily in local communities. Last year, when Lesotho was ravaged by famine, the company’s foundation helped feed 1-million people who were severely food insecure – almost 50% of the population.
Jonsson says his company exports little to the US – “it’s not really critical to our success”, he says – but this is not true of most other Lesotho garment-makers.
For this reason, Jonsson says, Lesotho Prime Minister Sam Matekane will “be doing all he can to resolve these issues with the US government”.
For Lesotho’s 11 garment factories and the thousands of workers in them, Trump’s tariff wand feels more like an executioner’s sword. Which is why Matekane seems to be offering a dangerously large number of concessions to placate the White House.
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