PREVIEW
Loss of trade concessions will marginalise the US as a market for many African exporters
The round of tariffs due to be imposed by the United States across the world on 2 April signals the end of the African Growth and Opportunity Act (AGOA) according to several economists in Africa. Many governments in the region are working on an assumption that the tariff reliefs under AGOA won’t operate between now and the law’s review by the US Congress in September.
‘AGOA is finished. It is dead in the water,’ says Alex Owino in Nairobi, a former advisor to Kenya’s Treasury under President Uhuru Kenyatta. AGOA will be formally torn up in September when it is due to expire, adds Owino.
The cost of AGOA to the US is marginal. But it cuts across President Donald J Trump’s preference for bilateral trade agreements and distaste for multilateralism and bodies such as the World Trade Organization in Geneva. Yet little progress has been made on negotiations for a Kenya-US trade deal under Trump’s first presidential term or that of Joe Biden. Even if such a deal had been sealed, it may have challenged regionally by the East African Community and the African Continental Free Trade Area.
The Center for Global Development, a Washington-based think tank, estimates that AGOA costs the US about US$250 million a year in foregone tariffs or about 2% of US aid to Africa before the recent cuts. The law was introduced by George W Bush’s administration in 2000. It gives over 30 African states tariff and quota-free access to the US market (Dispatches, 25/2/25, AGOA no longer?).
Prior to Trump’s inauguration, many political analysts had expected him to keep AGOA intact as a means to rival China’s trade influence in Africa. A bi-partisan bill seeking to extend AGOA has been in Congress for more than a year but stalled ahead of November’s presidential elections (Dispatches 16/4/24, Taking the politics out of AGOA).
As a bill passed by Congress, AGOA should carry more legal weight than a president’s executive order. But challenging its legitimacy in the US would require a court case or Congress defying Trump. That would require collective action by a group of African states, companies or US politicians: none of that looks likely.
The tariffs are paid by the US importers of African goods not the African traders. Yet the tariffs will depress the market for African exporters by increasing costs and bureaucracy.
These losses will come on top of the cuts in public health and other funding from the US Agency for International Development. USAID cuts could take as much as 7% of Kenya’s national income. That translates to about $750m and the loss of about 35,000 jobs.
Imposing more tariffs on African exports and ending AGOA in Congress will further marginalise the US economic and commercial presence in Africa, mainly to the benefit of China, the European Union and Britain – and will offer more opportunities for countries such as India, Turkey, Russia and the United Arab Emirates to expand strategic and commercial ties with the continent.
Only Lesotho, which Trump mentioned derisively in his speech to Congress on 6 March, and Eswatini trade more with the US than with Europe or China.
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