Why US tariffs encourage Lesotho’s regional competition

Lesotho’s garment industry, once a shining example of southern Africa’s industrial growth, is facing collapse. Unions are calling this a “gendered supply chain shock.” Following the US government’s imposition of reciprocal tariffs, the Kingdom’s largest private employer in the mountains is suffering massive cancellations and factory closures. Tariffs reached up to 50 percent before leveling off at a surcharge of 15 percent.

For the 50,000 workers who form the backbone of this sector, trading volatility has turned a stable livelihood into a daily struggle for survival. 80 to 95 percent of garment workers are women. In the capital Maseru, hundreds of laid-off women now gather in front of the factory gates every day at 7:00 a.m. hoping for a day shift, which rarely comes.

An industry under pressure

The clothing sector contributes around 20 percent of Lesotho’s gross domestic product (GDP) and has historically relied on the US market for over 90 percent of its exports. However, the combination of new tariffs and the short-term, one-year extension of the African Growth and Opportunity Act (AGOA), which provides duty-free access until 2026, has shaken buyer confidence.

This has three main consequences: massive job losses, an economic crisis and a regional disadvantage. As large private employers such as Precious Garments and Tai Yuan Garments have drastically cut jobs or closed their operations, an estimated 40,000 jobs are at serious risk.

The crisis has spread to the informal economy. Female workers, who are often the sole breadwinners for large families, report that they can no longer pay for basic necessities such as food, school fees and rent.

“The lack of orders from US buyers has forced textile companies to put workers on short-time work under the ‘no work, no pay’ principle. This has negatively impacted other sectors such as public transport, housing, retail and the informal economy,” Thabo Qhesi, Chief Executive Officer (CEO) of the Private Sector Foundation, previously confirmed, according to Forbes Africa.

Despite a recent US Supreme Court ruling overturning certain emergency tariffs, a new “substitute surcharge” of 10 to 15 percent continues to make Lesotho less competitive. Compared to regional neighbors such as Kenya, this proves to be a clear disadvantage.

“As the impact of tariffs on female-headed households in Lesotho takes its toll, this underscores how U.S. policy decisions can destroy jobs and livelihoods in the Global South. It also shows why trade should be fair for developing countries. Without urgent intervention, garment workers in Lesotho risk permanent exclusion from the formal economy,” warned Paule-France Ndessomin, regional secretary for sub-Saharan Africa at IndustriALL, in a recent statement.

outlook

The country once thrived under AGOA, which was implemented in 2000. It exported jeans and other ready-to-wear for major brands such as Levi’s, Gap, Calvin Klein, Walmart and Reebok to its main market, the United States. Annual exports to the USA reached over 230 million US dollars (211.60 million euros).

As the December 2026 AGOA deadline approaches, the Lesotho government is urgently looking to diversify into South African and Chinese markets. China’s new zero tariff policy for 53 African countries, set to come into force on May 1, 2026, is likely to help. However, experts warn that these markets cannot yet absorb the volume or reach the price points of the US denim trade. They are therefore more likely to benefit middle-income exporters such as Kenya, South Africa, Nigeria, Egypt and Morocco.

Another strategy is to promote small and medium-sized enterprises in Lesotho to strengthen resilience. However, this will take time. Without a long-term stable trade framework, the “denim capital of Africa” risks becoming a cautionary tale about the collateral damage of a trade war.