In a sweeping move, U.S President Donald Trump announced 10% baseline tariffs on imports from all countries while targeting countries with trade surpluses with the U.S, including poor African countries, with even higher tariffs. The new tariffs which Trump claims will bring an end to several years of unfair trade practices with the U.S while boosting the country’s manufacturing sector was described as “Liberation day” for the U.S as it’s expected to shift the balance of trade with most countries in favour of the U.S while punishing other countries for what Trump described as several years of unfair trade practices.
While the Trump’s administration was silent about the implications of their tariff hike with African countries, it goes directly against the provisions of the African Growth and Opportunity Act (AGOA) which is a trade law that was enacted by the George Bush administration in the year 2000 to promote economic growth and development in sub-Saharan Africa. The legislation provides eligible countries with duty-free access to the U.S market for certain categories of products and enhances trade benefits while fostering economic cooperation between the U.S and Africa.
While the implications for flouting the provisions of the AGOA Act are not very clear, several African countries depend on the U.S for a considerable percentage of their export earnings and foreign exchange needs, and the tariff hikes could have negative implications for their economies. Nigeria, for instance, exported $6.29 billion worth of goods to the U.S. in 2023, which accounted for approximately 10% of the country’s exports, while importing $3 billion, leaving the U.S. with a trade deficit of $3.29 billion. This substantial deficit puts Nigeria like several other African countries amongst the countries targeted for tariff hikes by the Trump administration.
The tariff hikes range from 10% to 50% depending on the level of trade deficit the U.S. has with the country in question. While Nigeria, for instance, was slammed with a 14% tariff, Lesotho was slammed with 50%. Mauritius 40%, Botswana 37%, Angola 32%, and South Africa 30%, Egypt, Morocco, Kenya, Tanzania, and several other African countries were left at the baseline tariff of 10%.
The tariffs would certainly send shockwaves across the continent as individual may have to contend with reduced export earnings, and this may have implications for their local currencies, which may fall in value as a result of the reduced inflow of dollars into their respective economies. The economic instability that will reverberate from this tariff hike will also lead to reduced Foreign Direct Investment (FDI) coming into Africa as investors take a wait and see attitude and if the objectives of the Trump administration are realized, it will also mean FDIs will be re-channelled to the U.S at the detriment of other countries around the world inclusive of African countries.
The tariffs would also have far-reaching consequences for African economies, including trade disruptions as a result of increased costs and reduced exports between African countries and the US. The tariffs could also exacerbate existing economic challenges, such as inflation and currency fluctuations, in some African nations while they may be compelled to explore new markets and strengthen trade ties with unaffected regions to mitigate the impact of the tariffs.
The Trump administration’s tariffs are part of a broader “America First” trade policy, aiming to correct perceived trade imbalances and promote US manufacturing. However, the move has sparked concerns about a global trade war and its potential consequences for international economic stability. While the full impact of the tariff hikes are yet to be felt, observers are hopeful that there is still room for negotiation, which may help usher in a more equitable trade structure that will cause less reverberations on global trade.
It remains to be seen how African countries will respond to the new tariffs.
Oshobi, a development economist, management consultant, and author, writes from Lagos, Nigeria.