Lesotho scrambles to save vital textile industry from Trump tariff tantrum

The Shining Century Textile company in the Maseru industrial area. (Photo : John Hogg / Flickr)

By Peter Fabricius

9 Apr 2025

At least 12,000 direct jobs are on the line after the US imposed 50% tariff hikes on Lesotho.

The tiny mountain kingdom of Lesotho is scrambling to avoid a collapse of its vital textile industry, which seems doomed if the massive 50% import tariff hikes imposed by US President Donald Trump go ahead.

Lesotho Trade and Industry Minister Mokhethi Shelile has joined the long queue of trade ministers trying to secure a meeting with the Trump administration to persuade it to lower the tariffs. But he is also trying to find alternative buyers – mainly in South Africa – for Lesotho textiles and is ready to buy more goods from the US to balance trade.

Lesotho’s economy is very heavily dependent on the US market. The 11 textile companies that export to the US employ 42% or 12,910 of the 30,830 workers in Lesotho’s textiles sector, the largest private sector employer and the second-largest after the government.

The US accounts for more than 20% of all of Lesotho’s exports, mainly in textiles and rough diamonds.

Shelile told Daily Maverick he was trying hard to prevent Trump’s tariffs from shutting down the 11 textile factories dependent on exports to the US. He said that would destroy 12,000 direct jobs and another estimated 40,000 indirect jobs of people who work in related businesses such as the haulage companies which truck the textiles to port.

The textile factories were established to take advantage of the duty-free access to the US market under the African Growth and Opportunity Act (Agoa). Trump’s huge new tariffs have effectively killed Agoa, though it is formally due for renewal – or termination – in September 2025.

Irrational formula

Lesotho is a microcosm of the hurt being inflicted on the world by Trump’s tariff tantrum. With a minute GDP of just $2.118-billion in 2023, Lesotho and the even tinier Saint Pierre and Miquelon, a French island territory off Canada (2023 GDP $3.46-million), were saddled with the highest tariff rates in the world on what Trump called “Liberation Day” last week.

He heaped “reciprocal” import duties on almost every nation on earth in an attempt, likely to be futile, to wipe out America’s massive trade deficit with the world.

Lesotho was hit hardest because it fell foul of the irrational formula which Trump officials used to calculate the import tariffs which other countries impose on US imports and the “reciprocal” tariffs which the US should impose on imports of these countries to eradicate the US trade deficits with them. The seemingly arbitrary formula was to divide the US trade deficit with each country by US imports from that country and then halve that figure.

Lesotho’s problem was that it exported $237.3-million worth of goods to the US in 2024 – mainly textiles and diamonds. It imported only $2.8-million worth of goods from the US – mainly because Lesotho imports almost all its requirements from nearby South Africa.

The disparity between US imports and exports left the US with a large trade deficit of $234.5-million. So 234.5 divided by 237.3 = 0.99. According to the US, that meant Lesotho imposes 99% tariffs on US imports, and the reciprocal tariff was calculated at half of that = 50%.

Read more: Trump’s tariff teardown, the broken maths behind it and the global fallout

The formula is clearly nonsense as Lesotho, in reality, charges no tariffs or virtually no tariffs on US imports, as Shelile pointed out to Daily Maverick.

He noted that the weighted average tariff which Lesotho charges on its imports from all countries was only 7.5%, and he added that this rate was the same for all member countries of the Southern African Customs Union (Sacu) as it has a common external tariff.

The US imposed different tariffs on all the Sacu members: 30% on South Africa, 10% on Eswatini, 37% on Botswana and 21% on Namibia.

The Shining Century Textile company in the Maseru industrial area. (Photo: John Hogg / Flickr)

Shelile told Daily Maverick he would point this out to Trump’s trade officials, though he said he had not yet managed to get an appointment with them.

“We are still in the queue, I guess – the president has said himself that everybody's coming to Washington.”

Shelile also said the US tariff calculation was based entirely on trade in goods and ignored the fact that the US had a large surplus in trade in services with Lesotho. For example, he noted that the Lesotho government used many Microsoft licences, as did the private sector.

Turning to SA

Apart from pointing out the tariff reality to US officials, though, he would also try to address other concerns that he believed the US had.

He understood, for instance, that US companies wanted a stake in power generation projects which Lesotho is undertaking. He noted that US wheat producers had also recently been in Lesotho, looking for markets. Lesotho was willing to consider such demands. That could help balance the trade between the two countries.

Shelile noted that Lesotho had 11 textile factories directly fulfilling contracts from the US, plus another six factories which were subcontracted by the 11 to do US production.

“We are working to lessen the impact,” he said, noting that two of the six factories were now safe as the government had managed to link them to a factory that has many orders from South Africa. That was helping to sustain 2,500 jobs.

He said Lesotho would also “have to go big in terms of trade promotion into South Africa, talking to all the major buyers of items of clothing”. This, he added, would be done with the SA government.

Read more: Why SA’s smartest move may be to hold fire on Trump’s trade war

The shock of Trump’s tariffs on Lesotho will be greater because it comes on top of recent cuts in development aid from Trump’s dismantling of the US Agency for International Development (USAid). It seems likely that some of the country’s large migrant worker population in South Africa could also be hit by the impact of the tariff cuts on South Africa.

Trump’s imposition of large tariffs on so many countries at the same time is likely to flood international markets with products diverted from the US, all competing with each other in other national markets.

“We can’t sugar coat it – this is a catastrophe,” Lesotho economist Thabo Qhesi told the local Sunday Express.

He calculated that the loss of jobs would suck over $80-million out of circulation – “impacting transport, landlords, supermarkets and more”.

Shelile said the trade ministers of the Sacu countries would meet on Sunday or Monday “to chart a way forward on how we can work towards getting out of this quagmire”.

Trump’s huge tariffs in effect added injury to insult for Lesotho, because on 5 March, he called it the African nation “which nobody has heard of” when he cut $8-million of USAid money for promoting LGBTQI+ rights in the country.

Ironically though, one of Lesotho’s textile factories, which he is about to put out of business, produces Trump golf shirts. DM

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Irrational formula

Turning to SA