The aggressive tariff policy being pursued by the US government has not only affected Europe and China but also the Global South — and especially the African continent. But the real issues run much deeper: while unfair trade relationships compel African countries to open their own markets, industrialized countries are using subsidies to deny others access to theirs.
Janine Walter directs the Rosa Luxemburg Foundation’s Johannesburg Office.
Many African countries still remain structurally dependent on the West — not least of all due to trade instruments such as the African Growth and Opportunity Act (AGOA), a law adopted by the US Congress in 2000. The AGOA gives African countries access to the US market, but has been used for many years as a means of exerting diplomatic pressure: those who fail to align themselves with Washington’s expectations risk being shut out of the programme.
Trump’s recent imposition of punitive tariffs is dramatically exacerbating this situation. With isolated exceptions, the new tariffs amount to at least 10 percent. The tariffs on cars, steel, and aluminium run to 25 percent. Tariffs on imports from across the EU were set at 20 percent, those directed at imports from China initially went as high as 145 percent; since mid-May they have been at 30 percent. Stiff tariffs are also being imposed on imports from African countries — for products from South Africa, they have been set at 30 percent, from Madagascar 47 percent, and from Lesotho 50 percent. Following negative reactions from the financial markets, the US government later suspended tariffs in excess of 10 percent, with the exception of industry-specific levies and those directed against China.
Officially, the Trump administration has justified the tariffs by reference to the US foreign trade deficit. However, numerous economists consider this rationale dubious, especially in relation to countries whose exports consist primarily of raw materials and hardly include any industrially produced goods at all. Let’s look at three examples from Africa.
South Africa, Madagascar, and Lesotho
South Africa is southern Africa’s leading economy. At the same time, the country is highly dependent on its trade relationships with the US: as Washington’s most important African trade partner, South Africa is one of the biggest beneficiaries of tariff-free access. In 2023, South Africa exported goods worth around 13 billion dollars to the US, including platinum (3.42 billion), vehicles (1.6 billion), and other precious metals (1.37 billion). In 2022, exports valued at around 3 billion dollars were transacted under the AGOA, comprising around 21 percent of South African exports to the US. Losing these trade advantages would have serious consequences: according to one study, South African exports to the US could shrink by 2.7 percent.
But the recent US tariffs are already having an effect on the South African economy. Since 3 April, Washington has imposed a blanket tariff of 25 percent on all vehicle imports — a heavy blow for South Africa’s automotive industry. According to one analysis, this key sector would be at risk of losing up to 112,000 jobs if South Africa were to be permanently expelled from the AGOA programme. In a country with one of the highest unemployment rates in the world at 33 percent (among young people it is even as high as 63 percent), such a step would place a significant burden on the labour market and further exacerbate social tensions. Job losses would affect a large number of households, particularly in the provinces of Gauteng and Eastern Cape, where BMW, Mercedes, and VW, among others, all have plants.
Madagascar is one of the poorest countries in the world. It depends on its agricultural sector, which is responsible for around 23 percent of GDP and employs around 70 percent of the country’s labour force. The island country exports commodities such as vanilla, coffee, and spices to the US, a trade that benefits from tariff-free market access. The Trump administration’s protectionist trade policy is now putting these exports in danger. Notably, new tariffs are putting a strain on the vanilla industry, thereby threatening the existence of thousands of small farmers, workers, and distributors. For many families, vanilla farming represents the only source of income. If it disappears, the risk is that poverty, which is already rife, will worsen.
Trump’s trade policy has revealed the dependence of many African countries on external markets and one-sided trade agreements.
Citing the high foreign trade deficit that the US also has with Lesotho, the Trump administration imposed punitive tariffs of 50 percent on all imports from the small African kingdom. An enclave surrounded entirely by South Africa, Lesotho exported around 237 million dollars worth of goods to the US in 2024. In return, it imported goods only worth about USD 3 million. The trade deficit is therefore real, but the political interpretation completely obscures the context.
The US benefits from cheap imports of raw materials, while Lesotho, like Madagascar, simply lacks the financial means to balance out the trade deficit by importing more from the US. Hence the tariffs threaten to reduce exports — and raise costs for American importers.
Add to that an economic imbalance, since Lesotho is in an acutely dependent position within global supply chains. Around 38,000 of its 2.3 million inhabitants work in the textiles industry, which is the country’s largest private sector employer. Eighty-five percent of textile goods are sold directly to the US — benefiting brands such as Levi Strauss and retail giants like Walmart, which have clothing produced in Lesotho in order to sell it cheaply in the US. Working conditions at the point of production are often dreadful, the wages are barely enough to live on, and many people work as day labourers without social security. In addition, union rights are severely constrained.
The new tariffs exacerbate an already deeply unjust system of trade. Positioned at the other end of global supply chains, Lesotho is at risk of being left even further behind. And if orders dry up, many people in the textiles industry, for instance, will lose their incomes. That means increased poverty and insecurity.
Regional Integration
Against this backdrop, alternative trade models are gaining in importance — first and foremost the African Continental Free Trade Area (AfCFTA). Compared to Europe and Asia, where intra-regional trade in 2023 comprised 68 and 58 percent of total trade, respectively, the share in Africa is a low 16 percent. The African Free Trade Area, which came into force in January 2021 and encompasses the 54 member states of the African Union, is intended to both enhance continental economic integration by reducing tariffs and non-tariff barriers to trade, and reduce African dependence on external markets.
But free trade alone will not suffice. Many African countries, like Madagascar and Lesotho, mainly export raw materials and import consumer goods. These conditions make it more difficult to strengthen intra-African trade.
In addition, establishing an African free trade zone involves risks. Unequal initial conditions and a lack of infrastructure are hampering implementation, which has so far been extremely sluggish. Preferential trade is advancing slowly, and important frameworks such as tariff reduction plans and rules of origin remain unclear. Additionally, trade unions have rightly criticized the fact that they have yet to be involved either in negotiations or at the implementation stage.
If a free trade area is to live up the idea of social justice, it must centre these issues. As long as economically powerful countries profit disproportionately, there is a risk that existing inequalities will be exacerbated. There need to be targeted investments in economic participation that go beyond the neoliberal logic of the market.
However, if those involved succeed in combining the African Free Trade Area with a just trade policy and an ambitious programme for industrialization, then the result could indeed be a transformative project. For countries such as Madagascar, whose economy depends on just a few export categories, this could open the way to a diversified economic structure.
Global Alternatives
While Africa is attempting to reposition itself through the African Free Trade Area project, a realignment is also under way at the global level. Traditional economic powers — first and foremost the US and the EU — are becoming less influential. In their place, new, multi-polar alliances are gaining in significance.
The BRICS Plus alliance is a key current development that has seen new economic prospects open up for many countries of the Global South. Instead of having to rely on asymmetrical North–South agreements, BRICS Plus has enabled forms of cooperation that are, at least potentially, based more firmly on mutual interests. Nonetheless, these partnerships are certainly not free of asymmetrical power relations either.
Against the backdrop of the U-turn in US trade policy, international trade and tariffs policy was on the agenda at the most recent meeting of BRICS foreign ministers at the end of April. Even before the meeting took place, Brazilian diplomat Mauricio Lyrio emphasized the significance of a “strong, multilateral trade system”. The issues, he noted, are not just technical but also concern fundamental principles: who will determine the rules of global trade in the future — and by reference to which standards?
As far as Africa is concerned, the BRICS Plus expansion could have the effect of stimulating its economies — at least to the degree that the African Free Trade Area is used as a basis for strengthening intra-African trade. Closer integration with BRICS Plus is a definite possibility, for instance through the development of regional supply chains. At the same time, the key challenge remains to be solved: how is it possible to avoid a situation in which new power arrangements simply perpetuate old patterns of dependency?
Trump’s trade policy has revealed the dependence of many African countries on external markets and one-sided trade agreements. Countries such as South Africa, Madagascar, and Lesotho are feeling the effects particularly acutely.
Against this backdrop, alternatives such as the African free trade agreement and BRICS Plus are acquiring new significance. They offer opportunities for — but no guarantees of — increased economic independence. However, one thing is certain: without industrialization, without a fair distribution of profits, and without social standards, the likely outcome will be new relations of dependency. A more just system of world trade cannot arise through a neoliberal approach that simply aims to open up markets. What is needed is a transition to trade relationships based on cooperation.
This article first appeared in nd.Aktuell in collaboration with the Rosa Luxemburg Foundation. Translated by Marc Hiatt and Joseph Keady for Gegensatz Translation Collective.