by Mish Shedlock, Mish Talk:
The BBC reports ‘How will we survive?’ Lesotho factory that made Trump golf shirts hit hard by US tariffs
A garment factory in Lesotho, which has produced Trump-branded golf shirts, may have to soon shut down following the massive import taxes, or tariffs, imposed by the US government earlier this year.
The small, southern African kingdom was hit with “reciprocal” tariffs of 50% – a higher rate than any other country – when they were announced by US President Donald Trump in April.
TRUTH LIVES on at https://sgtreport.tv/
Although they have since been put on hold, Trump says they will be reimposed this Friday, 1 August, along with other countries around the world, unless a separate deal is reached.
The mother of one young child has worked there for almost a decade, also supporting her extended family on her monthly salary of $160 (£120).
Lesotho has become known as the “denim capital of Africa”. The country’s garment factories also produce jeans for iconic American brands such as Levi’s and Wrangler.
Uncertainty over the future of the country’s clothes industry is one reason why Lesotho declared a national “state of disaster” earlier this month in order to speed up job-creation.
The textile and garment industry is Lesotho’s largest private sector employer providing, at its peak, around 50,000 jobs, out of a population of just over two million.
But the Lesotho textiles boom boosted by Agoa meant that it had a trade surplus with the US – exporting more than it imports from the country.
And that was why Trump imposed such high tariffs on the country, which appear to have put an end to Agoa, threatening the future of the one bright spot in the country’s economy.
Despite the relative success of the clothes factories – until now – the country as a whole is still struggling to create enough jobs for its young population.
Unemployment stands at 30% but for young people the rate is almost 50%, according to official figures.
Factory Shut Down
Play the video, it’s quite a sad story.
Lessons From Lesotho
ABC News Reports As Trump’s tariff deadline looms, a clothing factory in the tiny African nation of Lesotho goes dark
In the tiny African nation of Lesotho, clothing manufacturer Tzicc’s business has dried up in the face of tariffs imposed by U.S. President Donald Trump’s administration. A few months ago, work was steady. The factory’s 1,300 employees has made and exported sportswear to American stores, including JCPenney, Walmart and Costco.
But when Trump announced sweeping new tariffs on nearly all U.S. trading partners in April, Lesotho found itself topping the list, with a rate of 50% — higher even than that of China, where the economy is 8,000 times larger. Officials here and economic experts said they were baffled.
Since then, Trump backed off — temporarily. During a monthslong pause for trade talks, the U.S. has charged a baseline 10% tariff and announced new rates for dozens of countries starting Friday. Lesotho’s rate will be set at Trump’s whim, with aides suggesting that tariffs charged on goods from smaller African countries could top 10%.
For Tzicc and its customers, the threat and apparent singling out of Lesotho were enough. Management decided to rush to deliver preexisting orders before tariffs resumed. But American buyers stopped placing new orders. With no work left, virtually all the factory’s employees were sent home — potentially permanently.
“Well, unfortunately, we finished,” factory compliance manager Rahila Omar said, pointing out the irony of the strategy as she walked among rows of silenced and covered machines. “That is why now we don’t have any work.”
Officials and workers fear this may be a sign of what’s to come for other factories in Lesotho, where poverty is widespread among the population of 2 million and most textile workers single-handedly support their families.
In March, a month before slapping Lesotho with the 50% tariff, Trump described it as a place “nobody has ever heard of,” struggling to pronounce the nation’s name in a speech criticizing U.S. foreign aid.
It’s true Lesotho is a “very minuscule economy,” as its own trade minister, Mokhethi Shelile, described it.
But its relationship with Washington dates back decades. The U.S. was the first country to open an embassy in the capital, Maseru, after Lesotho declared independence from the United Kingdom in 1966. The military received U.S. training, and hundreds of millions in U.S. funds were sent to Lesotho to fight the HIV/AIDS epidemic via the now defunct USAID office and the PEPFAR program.
In 2000, the U.S. signed the African Growth and Opportunity Act, allowing Lesotho and other African nations to export goods to the U.S. duty free.
Shelile said he was in the process of negotiating AGOA’s September renewal when he was awakened in the middle of the night by texts from aides bearing news of the 50% U.S. tariffs.
“No, this cannot be real,” Shelile remembers thinking. “What did we do to deserve this?”
According to the Trump administration, Lesotho charges a 99% tariff on U.S. goods. The government here said it doesn’t know how the U.S. calculated that. [Trump is an economic illiterate, that’s how. But 99% is double my calculation listed below. Attribute that to typical Trump exaggeration.]
Nearly half the population lives below the poverty line.
“The trade deficit that exists between Lesotho and the U.S. is a natural trade deficit that can happen when you have these types of disparities between two economies,” Shelile said. “It cannot be breached and certainly cannot be breached by imposing tariffs.”
US Trade With Lesotho Through May 2025
Trump’s Moronic Tariff Calculation
Tariff Percent = ((Imports – Exports) / Imports) * 50
or Tariff Percent = (Net Imports / Imports) * 50
