What is AGOA?
In 2000 the African Growth and Opportunity Act (AGOA) trade agreement exempted 1,800 Sub-Sahara African products from import duties to the United States. This was enacted by President Bill Clinton to boost Africa’s economic growth.
The program has been reenacted once in the past two and a half decades but is due to lapse on September 30, 2025.
A number of African countries, particularly Lesotho, Madagascar, Mauritius, Angola, Côte d’Ivoire, Malawi, Mozambique and South Africa took advantage of AGOA to increase their manufacturing, mining and agriculture sectors.
Trump Administration Tariffs
This all changed when, on April 9, 2025, the US stated that tariffs ranging from 11 percent to 50 percent would be applied to fifty-seven countries listed in Annex I of the President’s Executive Order.
Sixteen of these countries are from Sub-Saharan Africa and 11 from Southeast Asia.
The tariffs were calculated by taking the U.S. trade deficit with a particular country and dividing it by the 2024 total goods imported from that country. The resulting number was subsequently divided by two to reach the final tariff rate.
In the top ten most affected countries eight are from Africa and Southeast Asia with Lesotho (50%), Cambodia (49%), Laos (48%), Madagascar (47%), Vietnam 47%, Myanmar (45%), Sri Lanka (44%), Mauritius (44%).
These countries are likely to see their economies take a serious knock.
What’s in the detail?
The executive order does exempt over 1,000 products that the US needs or would like acquired outside of China, such as critical minerals and rare earths. It also excludes items that are made in a foreign country that contain US products that are at least 20 percent by value of the declared value of the product. Also excluded are products like steel and aluminium, passenger vehicles, light trucks, and vehicle parts.
More changes
While automobiles and auto parts are already subject to additional tariffs of 25 percent (announced on March 25, 2025), on June 3, 2025, the White House announced that the additional tariffs on steel and aluminium would increase to 50 percent.
On April 9, the day the country-specific rates were scheduled to enter into force, President Trump issued another Executive Order that suspended all the higher country-specific tariffs on products from all countries except China. The additional higher duties on goods from all the other countries are suspended until July 8, 2025. However, the 10 percent rate continues to apply to all imports from the originally named countries and territories.
On July 7 President Trump sent personal letters to the leaders of numerous countries confirming that new tariffs will be imposed on their governments with effect from 1 August 2025. In some cases, the tariffs remained unchanged from his April statements and others had slight variations.
As he has shown already, it is possible that there will be more changes before the end of July. However, the uncertainty persists, and markets continue to show significant fluctuations.
What is the impact on the Retail Industry?
There is no direct impact on the Retail Industry but reduced exports may mean lowered economic growth and less access to foreign currency which in turn can spell a decline in access to imported Consumer Packaged Goods and less cash available to spend on the goods that are available. Until August 1 and/or September 30, we will not know for sure, and even thereafter, changes may occur with an Executive Order.
This economic uncertainty has a knock-on effect that starts with the export products on which the tariffs are imposed and runs all the way to Consumer Packaged Goods that are imported and consumed within the affected country.
Market Research offers a hedge against uncertainty
A hedge against this uncertainty is on-going market research which ensures up to date information of consumer behaviour and demand for specific Consumer Packaged Goods.
Frontline Research Group are specialists in market research of Consumer Packaged Goods in Africa and have been working with modern and traditional trade for nearly three decades.
They have masses of retail census data and have ongoing retail tracking projects across the continent.
Contact Steve Johnson, Managing Director of Frontline Research Group, for analysis, insights and direction in the African retail environment. Contact Steve on Tel: +230 5493 6376 or email: steve@frontlineafrica.com
