The tariff trap: Why Lesotho’s “reciprocal" duties hand advantage to regional rivals

Lesotho’s garment industry, once a beacon of industrial growth in Southern Africa, is facing a collapse that unions describe as a “gendered supply chain shock.” Following the US administration’s imposition of “reciprocal” tariffs — which reached as high as 50 percent before settling at a 15 percent surcharge — the mountain kingdom’s largest private employer is reeling from mass order cancellations and factory closures.

For the 50,000 workers who form the backbone of this sector — 80 to 95 percent of whom are women — the trade volatility has transformed stable livelihoods into a daily struggle for survival. In the capital Maseru, hundreds of retrenched women now gather outside factory gates as early as 7:00 am every day, hoping for a single day’s shift that rarely comes.

An industry under pressure

The textile sector contributes roughly 20 percent of Lesotho’s 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 grants duty-free access through 2026, has shattered buyer confidence.

This has resulted in three major consequences: mass job losses, an economic crisis and a regional disadvantage. As major private employers like Precious Garments and Tai Yuan Garments have cut back jobs drastically or closed, respectively, an estimated 40,000 jobs are now at high risk.

The crisis has spilled into the informal economy and female workers, who are often the sole breadwinners for extended families, report an inability to pay for basics like food, school fees and rent.

“Lack of orders from US buyers has compelled textile firms to put workers on short time with the principle of ‘No Work No Pay.’ This has negatively affected other sectors like public transport, residential property, retail and the informal sector economy,” said Thabo Qhesi, CEO of the Private Sector Foundation, earlier according to Forbes Africa.

Despite a recent US Supreme Court ruling striking down certain emergency tariffs, a new 10 –15 percent “replacement surcharge” continues to make Lesotho less competitive than regional neighbours like Kenya for instance, thus proving a regional disadvantage.

“As the effects of punitive tariffs on women-headed households in Lesotho take their toll, this underscores how US policy decisions can devastate jobs and distant livelihoods in the Global South, and why trade should be fair for developing countries. Without urgent intervention, Lesotho garment workers risk permanent exclusion from the formal economy,” warned Paule-France Ndessomin, IndustriALL Sub Saharan Africa regional secretary, in a recent statement.

Looking ahead

The nation, once thriving under AGOA, which was introduced in 2000, exported jeans and other ready-made garments for major brands like Levi’s, Gap, Calvin Klein, Walmart, Reebok and others to its main market, the United States, with annual US exports reaching over 230 million US dollars.

As the December 2026 AGOA deadline looms, the Lesotho government is urgently seeking to diversify into South African and Chinese markets. The latter’s new zero-tariff policy for 53 African countries, set to start from 1st May 2026, should help. However, experts warn that these markets cannot yet absorb the volume or match the price points of the US denim trade and should benefit middle-income exporters such as Kenya, South Africa, Nigeria, Egypt and Morocco more than Lesotho.

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