America gives, and America takes away. Ask Lesotho. Twenty years ago the US showered the impoverished diminutive southern African kingdom with development assistance and access to the vast US consumer market. Now, the combination of Donald Trump’s impossibly high tariffs and his destruction of the US aid budget are trashing the clothing industry that it has painstakingly built up since.
Lesotho is an extreme example of the threat to developing economies, including the low-income least developed countries, from the absurd mechanical formula that set Trump’s so-called “reciprocal” tariffs. Lesotho is threatened with 50 per cent duties, suspended until August 1. The Trump tariffs are also menacing other LDC garment manufacturers like Bangladesh and Cambodia (35 and 36 per cent duties respectively) as well as more obvious targets like China and Vietnam.
Tariffing Lesothan exports to reduce the country’s trade surplus with the US is obscene. Its small clothing companies pose no real competitive threat to America’s few remaining textile and garment producers. The episode illustrates a wider point. Punting your country’s economic future on the kindness of strangers in the form of trade preferences creates uncomfortable risk.