Africa braces for likely end of AGOA trade deal under Trump

NAIROBI - Since returning to office, U.S. President Donald Trump has cut vital aid to Africa and introduced tough new tariffs on many countries' exports - but another blow may be coming with the expiration of a flagship trade programme.

The Trump administration's protectionist trade policies have plunged the fate of the African Growth and Opportunity Act (AGOA) into doubt when it expires in September.

This could have a devastating effect on jobs and incomes in many African nations.

Here is what you need to know.

What is AGOA, and why was it established?

AGOA was passed in 2000 under former president Bill Clinton to deepen trade with sub-Saharan Africa and boost economic development.

It grants duty-free access to the U.S. market for thousands of African products, including motor vehicles and parts, textiles and clothing, minerals and metals, agricultural products and chemicals exported by eligible African countries.

It has been renewed twice and is due to expire on Sept. 30.

How has AGOA benefitted African countries?

More than 30 African countries are eligible for AGOA.

Countries can lose and regain eligibility based on criteria including economic policies and protection of human rights. Countries seen to undermine U.S. national security or foreign policy interests are not eligible for AGOA.

The initiative has encouraged some countries to introduce reforms in governance and labour rights in order to qualify.

Although economic benefits have been uneven across the continent, research has shown that AGOA has improved many Africans' lives by creating jobs and reducing poverty.

Women in particular have found work in the apparel sector and have seen knock-on benefits in education and access to healthcare.

It has also helped drive industrialisation and economic diversification in countries including Nigeria, Kenya and Madagascar. For example, Ghana's non-oil exports to the United States rose to $2.76 billion in 2022, with a significant portion linked to AGOA preferences.

Between 2001 and 2022, exports to the U.S. enabled by AGOA totalled approximately $103 billion in non-oil goods and created hundreds of thousands of jobs.

The United States benefits by furthering its interests on the continent and gaining access to critical minerals and investment opportunities.

AGOA has also been an important soft power tool that helps the United States counter Chinese influence, analysts said.

Which countries and sectors would be hit hardest if AGOA is not renewed?

South Africa, which saw a nearly sixfold increase in automotive exports to the United States under AGOA, would be among the hardest hit, with billions in lost export revenue and significant job losses hitting vulnerable rural areas hardest.

In April, Trump said he would impose a 50% tariff on the tiny kingdom of Lesotho, and although that has now been slashed to 15%, the reprieve was too late to prevent damage to the textiles sector, according to officials and members of the industry.

Botswana, Mauritius, Malawi and Chad also face losses if AGOA is not renewed, especially in textiles, manufacturing and agriculture, with some of these sectors already affected by U.S. tariffs.

What is most likely to happen with AGOA?

AGOA is widely expected to lapse, with U.S. legislators unlikely to invest time and political capital to back a trade deal amid growing protectionism.

Another possibility is the initiative will be modified to focus on critical minerals, including lithium, cobalt, copper and manganese, which are vital for the global shift to clean energy and new technologies.

A new version of AGOA could exclude South Africa, which has angered Trump with its land reform policy and genocide case against Israel at the International Court of Justice.

What will African countries do if AGOA is not renewed?

Countries could focus instead on the African Continental Free Trade Area (AfCFTA), which was launched in 2021 to unify all 1.4 billion people into a single market but whose implementation has been slow.

Nations could also expand trade ties with China, the European Union and Gulf states.

Some African states could seek to align projects with U.S. strategic interests - such as critical minerals supply chains and clean energy infrastructure - to get preferential treatment.

(Reporting by Nita Bhalla; Editing by Ayla Jean Yackley.)