Africa: How the New U.S. Tariffs Were Calculated and What They Mean for AGOA Trade Deal

Cape Town — The formula used by the Trump administration to calculate the tariffs the United States is imposing on countries across the globe is being widely criticised by trade specialists.

President Donald Trump characterised them as “reciprocal” as well as generous to the countries he has targeted – claiming that duties imposed on U.S. imports from each country amount to half those levied by those nations on American exports.

The higher tariffs to be charged beginning April 9 affect 20 African nations – as well as many others – and are distinct from the “baseline” tariffs on goods imported from all countries that took effect on April 4.

“If a particular country was taxing American imports with a 50 percent tariff, it might seem fair for the U.S. to tax their imports at 50 percent as well,” trade economists Peter Draper and Vutha Hing write in an analysis published by The Conversation. “But appearances are deceiving.”

Instead of comparing the actual tariffs charged by the U.S. and the targeted nations, the administration has chosen what Draper and Hing describe as “a crude formula based on bilateral trade deficits between the US and each specific country.”

Those calculations take the U.S. trade deficit with a target nation – the value by which U.S. imports from the country exceed its exports to the country, divides that figure by the value of the exports, then halves the result to produce the new rate.

The details of the calculations published by the Office of the U.S. Trade Representative are “highly misleading”, write Draper and Hing. “While the use of economic formulas… might give it an appearance of being grounded in economic theory, it is detached from the rigours of trade economics,” they write. The methodology used ignores the large demand for imports by American consumers and U.S. government debt.

“The U.S. runs large trade deficits not primarily because other nations have high trade barriers but largely because Americans need to fund their debts and want to buy lots of imported goods,” they write. “The formula assumes every trade deficit is a result of other countries’ unfair trade practices, but that is simply not the case.”

Take Lesotho, upon which the Trump administration will levy its highest tariff of 50%.

Figures published by the U.S. Trade Representative show that U.S. imports from Lesotho in 2024 totaled $237.3 million, while exports to Lesotho were valued at $2.8 million. It is impossible to conceive of Lesotho, classified by the United Nations as one of the world’s 44 “least developed countries” (LDCs), being able to import goods from the U.S. equal to the value of its exports.

“Insisting on balanced trade with every trading partner individually is bonkers,” The Economist said in a scathing article, comparing the approach to “asking a company to ensure that each of its suppliers is also a customer.” The London-based magazine also described the administration’s method of calculating tariffs as “almost as random as taxing you on the number of vowels in your name”.

Draper told AllAfrica that apart from the “arbitrary” nature of the U.S. formula, it was “widely panned by the trade economics community.” Now based in Australia, heading the Institute for International Trade at the University of Adelaide, he said: “What no one in Australia can understand is why four Australian island territories, including two occupied solely by penguins, also attracted higher tariffs than Australia’s.”

What remains unclear for the African nations on the list is whether the new tariffs will override the concessions granted to 14 of the 20 Africa nations under the African Growth and Opportunity Act (AGOA). That legislation – adopted in 2000 and supported by both Republicans and Democrats – provides duty-free access to the U.S. market to sub-Saharan African countries that meet specified standards of political, legal, and economic governance.

At present, Lesotho, Madagascar, Mauritius, Botswana, Angola, South Africa, Namibia, Cote d’Ivoire, Malawi, Zambia, Mozambique, Nigeria, Chad and the Democratic Republic of the Congo qualify for AGOA and face the new, high tariffs.

The government in South Africa is assuming that AGOA will fall away. In a statement released on Friday, Foreign Minister Ronald Lamola and Trade Minister Parks Tau said the “reciprocal” tariffs “effectively nullify” AGOA preferences. They also contended that “South Africa’s average tariff is 7.6 percent and therefore South Africa needs clarity on the basis for the 31 percent to be implemented by the U.S.”

Kenya – which has better relations with the Trump administration than does South Africa – is assuming the opposite, at least until September 2025, when AGOA expires.

The Principal Secretary in Kenya’s foreign ministry, Dr. A. Korir Sing’Oei, told Kenyan media that since AGOA was passed by Congress, “it is our considered view that until the law lapses at the end of September 2025 or unless repealed earlier by Congress, the new tariffs imposed by President Trump will in any event still not be immediately applicable”.

By John Allen