Sign in Subscribe
College faculty

Africa's Trade Deal with the US Hangs in the Balance

Strategic Insights

— 2 min read

As the US-Africa trade deal, known as the African Growth and Opportunity Act (Agoa), approaches its quarter-century mark, its future remains uncertain. The deal, which has been in place since 2000, has provided duty-free access to the US market for thousands of products from roughly 35 sub-Saharan African countries. The trade preferences have been instrumental in supporting hundreds of thousands of jobs, with a sizeable proportion held by women and young workers. However, with the deal set to expire on September 30, 2025, exporters are facing a double squeeze on competitiveness, and the consequences of a lapse will be uneven among exporters.

Key Takeaways:

  • The African Growth and Opportunity Act (Agoa) has been in place since 2000 and has provided duty-free access to the US market for thousands of products from roughly 35 sub-Saharan African countries.
  • The trade preferences have been instrumental in supporting hundreds of thousands of jobs, with a sizeable proportion held by women and young workers.
  • The deal is set to expire on September 30, 2025, and exporters are facing a double squeeze on competitiveness.
  • The consequences of a lapse will be uneven among exporters, with apparel hubs such as Lesotho, Eswatini, Madagascar, Kenya, and Mauritius being hit hardest.
  • South Africa's shipments of vehicles, parts, wine, citrus, and nuts also face new tariffs, which could undercut auto supply-chain investment and farm incomes.
  • Oil exporters are less exposed to the tariffs, as crude oil generally faces low US tariffs already.
  • Countries that only recently regained eligibility after earlier suspensions are likely to see investors hesitate again amid renewed uncertainty.
  • African exporters can look to other measures to shore up business, such as redirecting vulnerable orders to the European Union's (EU) preference routes.
  • They can also invest in competitiveness, build regional inputs, and scale testing and certification to move up the value chain.
  • Only Congress can restore certainty by passing a short, retroactive "bridge" renewal, followed by a clear timeline for a multi-year Agoa update.

Statistics:

  • The US imported $791 billion worth of goods from 2001 to 2021 from Agoa-eligible countries.
  • The corresponding value of US economic assistance to these countries amounted to $145 billion from 2001 through 2019.
  • The trade preferences have particularly benefited apparel, textiles, agriculture, and light manufacturing, with uneven impact among countries.
  • The high cost of uncertainty for Africa includes erased thin margins, redirected orders, and factory closures and job losses.
  • Transitional deals are being floated, but only an enacted law restores certainty for buyers and factories.

Sources:

  • The Conversation -- Africa -- By Bedassa Tadesse, Professor of Economics, University of Minnesota Duluth
  • The Conversation -- Africa -- US-Africa trade deal turns 25 next year: Agoa's winners, losers and what should come next
  • The Conversation -- Africa -- Africa's trade deal with the US was left in limbo: what exporters can do about it

Read more