Lesotho regains duty-free access to US market

Lesotho’s exports can again enter the United States without tariffs after a temporary levy introduced following a landmark Supreme Court judgment expired, offering crucial relief to the country’s garment factories and thousands of workers.

The Ministry of Trade, Industry and Business Development welcomed the restoration of duty-free treatment, saying the change would strengthen the competitiveness of products manufactured in the kingdom. The tariff expired on July 29, removing an additional cost that had disrupted orders and placed pressure on Lesotho’s largest private-sector employer.

Clothing and textile producers are expected to be the main beneficiaries. The sector employs more than 30,000 people directly, with many more relying on factory activity through transport, retail, accommodation and other services. Women account for a large share of the garment workforce, making changes in US trade policy particularly important for household incomes.

The removal of the levy follows a United States Supreme Court ruling in February that invalidated broad tariffs imposed under the International Emergency Economic Powers Act. The court ruled by six votes to three that the law did not give the president unlimited authority to impose taxes on imported goods without clear approval from Congress.

Chief Justice John Roberts, writing for the majority, said Congress had historically delegated tariff powers in explicit terms and within defined limits. The judgment did not remove tariffs imposed under other trade laws, leaving the administration with narrower legal routes to apply duties to particular industries or countries.

President Donald Trump had introduced sweeping “Liberation Day” tariffs in April 2025, initially assigning Lesotho a 50 per cent rate, among the highest applied to any trading partner. The rate was subsequently reduced to 15 per cent, but it remained a serious obstacle for a small economy whose factories compete for price-sensitive orders from American brands and retailers.

Lesotho had previously built its garment industry around preferential access offered by the African Growth and Opportunity Act. The programme allows eligible sub-Saharan African countries to export thousands of product categories to the US without customs duties, provided they meet governance and market-access conditions.

The duty-free arrangement encouraged manufacturers from Asia and South Africa to establish operations around Maseru and other industrial areas. Lesotho became one of Africa’s leading exporters of garments to the United States, producing jeans, sportswear and other clothing for major international labels.

Textile exports to the US have accounted for roughly a tenth of Lesotho’s gross domestic product. Total goods and services trade between the two countries stood at about $276 million in 2024, with clothing and diamonds dominating Lesotho’s shipments.

The tariff shock weakened that manufacturing model. Buyers delayed or cancelled orders, factories reduced production and some workers lost permanent employment. Labour groups warned that prolonged duties could force businesses to close or relocate to countries offering lower costs and more predictable access to the American market.

The expiry of the levy may now allow manufacturers to negotiate new contracts and restore production. However, factory managers are likely to remain cautious because orders are usually agreed months in advance and depend on confidence that tariff arrangements will remain stable throughout the production and delivery cycle.

Uncertainty also surrounds the future of the African Growth and Opportunity Act. The programme, first enacted in 2000, was extended through December 31, 2026, after its previous authorisation expired. Lesotho has called for a longer agreement, arguing that a short extension does not give manufacturers enough certainty to invest in machinery, training and factory expansion.

Trade Minister Mokhethi Shelile has pressed for a durable US-Africa trade framework that offers predictable market access beyond annual or short-term renewals. Lesotho is also seeking to diversify its export destinations through the African Continental Free Trade Area and other regional markets, although the scale and purchasing power of the US clothing market remain difficult to replace.