Has Lesotho’s Tariff Relief Missed the Window?
Tariff relief for Lesotho may have come too little too late.
While goods from the small southern African nation have started entering the United States duty-free following the expiration of President Donald Trump’s temporary 10 percent global tariff regime, widely seen as a stopgap after the Supreme Court struck down the “Liberation Day” tariffs in February, Lesotho‘s former “reciprocal” 50 percent rate may have already taken a toll, insiders say.
More from WWD
“Things are not well in the country; the damage is already done,” said Solong Senohe, secretary-general of the United Textile Employees Union, or UNITE. “Working conditions are deteriorating as companies—especially those exporting to South Africa, which employ fewer workers than those exporting to the U.S. market—are taking advantage of the situation. Some workers are being forced to work unpaid overtime, and some are dismissed for being union members.”
Still not helping, Senohe said, is the volatile status of the African Growth and Opportunity Act, the trade preference program that gave eligible sub-Saharan African countries, including Lesotho, duty-free access to the U.S. market for 25 years.
When AGOA was allowed to lapse last September, importers were left paying a modified 15 percent tariff rate. By then, however, the Lesotho government had already declared a national state of disaster, citing the economic shock after the initial 50 percent tariff threat prompted major U.S. clothing brands—including The Children’s Place, Levi Strauss & Co. and Wrangler—to pause, scale back or cancel future orders.
Congress’s retroactive extension of AGOA through Dec. 31 also did little to stabilize Lesotho’s garment sector, which accounts for more than half of the country’s manufactured exports and employed 54,000 people at its peak, because the narrow time window undercut the long-term planning global fashion supply chains require. The move was also largely moot: When the Trump administration enacted its flat 10 percent import surcharge under Section 122 of the 1974 Trade Act in February, less than a month after Congress’s green light, it also effectively nullified AGOA’s zero-tariff benefits.
“There are orders, but they are in small quantities,” said Lieketseng Leteka, project coordinator for the Sub-Saharan Region for IndustriALL Global Union and legal representative for the Independent Democratic Union of Lesotho. “Buyers are hesitant to place orders in large quantities mainly because they are not certain what will take place in September regarding AGOA.”
Credit: Source link