Lesotho Faces Economic Crisis as U.S. Slaps 50% Tariff Under Trump’s ‘Reciprocal Trade’ Policy

Lesotho, one of the world’s smallest and poorest nations, is facing a potentially devastating economic blow following the imposition of a 50% reciprocal trade tariff by the United States—its highest levy yet under President Donald Trump’s sweeping trade overhaul.

The new tariffs, announced Wednesday as part of a broader reworking of U.S. trade policy, mark a sharp departure from decades of rules-based global commerce. President Trump said the levies were designed to counter what his administration claims are disproportionate duties and non-tariff barriers imposed by trading partners on American exports. In the case of Lesotho, the White House cited a 99% tariff rate on U.S. goods.

In March, Trump disparaged the landlocked Southern African kingdom as a place "nobody has ever heard of." Now, Lesotho is at the center of a geopolitical and economic standoff that analysts warn could cripple its fragile economy.

“The 50% reciprocal tariff introduced by the U.S. government is going to kill the textile and apparel sector in Lesotho,” said Thabo Qhesi, an independent economic analyst based in Maseru. “So Lesotho will be dead, so to say.”

With a gross domestic product just over $2 billion, Lesotho relies heavily on textile and diamond exports to the United States—goods that accounted for $237 million in 2024, or more than 10% of its GDP. Much of this includes popular apparel brands such as Levi’s jeans, produced under the African Growth and Opportunity Act (AGOA), a long-standing U.S. trade initiative aimed at supporting African development through preferential market access.

However, Trump’s tariff order effectively signals the collapse of AGOA. Trade experts say the move, along with the earlier dismantling of USAID—Washington’s primary development agency—represents a broader rollback of U.S. engagement with Africa.

According to Oxford Economics, Lesotho’s textile industry employs around 40,000 workers, making it the country’s largest private sector employer. The sector accounts for approximately 90% of all manufacturing employment and exports.

“The impact will not be limited to factory closures,” Qhesi added. “You are also talking about retailers selling food, landlords renting homes to workers—if the industry collapses, there will be cascading effects throughout the economy.”

The government of Lesotho, a mountainous nation of two million people surrounded entirely by South Africa, has yet to issue an official statement on the tariff. However, its foreign minister previously acknowledged the strain caused by the cessation of U.S. aid, particularly in the country’s health sector, which has been heavily dependent on external assistance. Lesotho also has one of the highest HIV/AIDS infection rates globally, further compounding its vulnerabilities.

The tariff formula employed by the Trump administration takes the U.S. trade deficit in goods with each country and divides it by the value of imports from that country, then imposes a levy equal to half the resulting ratio. This method disproportionately penalizes nations that export to the U.S. but import little in return—often small or developing economies.

Lesotho is not alone. Countries like Madagascar, Vietnam, Nicaragua, and Cambodia—where U.S. exports represent a significant share of GDP—have also been hit hard.

For ordinary citizens in Lesotho, the situation has sparked frustration and resignation. Corn vendor Sekhoane Masokela voiced his dismay over the tariffs, saying the country should begin looking elsewhere for trading partners.

“His [Trump’s] is not the only country, so he is giving us an opportunity to cut ties with him and look for other countries. It is evident that he no longer wants anything to do with us,” Masokela told reporters.

As Lesotho braces for the fallout, analysts warn the consequences of this abrupt policy shift may be long-lasting, not only for the kingdom but for the broader relationship between the United States and the African continent.