Fashion
How US tariffs rattled Lesotho’s apparel sector
Lesotho’s manufacturing sector has long been regarded as one of its most promising economic pillars, with textiles and apparel leading the charge. Alongside industries like footwear, food, and beverages, textiles have emerged as the dominant force—providing jobs, foreign exchange, and a sense of industrial identity for the small, landlocked southern African nation.
Lesotho’s manufacturing sector, led by textiles and apparel, has been a major economic driver, creating thousands of jobs and generating substantial export earnings, making it a top garment exporter in Sub-Saharan Africa.
However, the US tariff of 50 per cent, which was eventually lowered to 15 per cent after a 90-day pause, triggered mass order cancellations and widespread layoffs.
Over the past two decades, Lesotho has carved out a niche for itself in the realm of garment manufacturing and export, thanks in large part to the African Growth and Opportunity Act (AGOA). The trade deal granted duty-free access to US markets for eligible Sub-Saharan African countries, and Lesotho made the most of it.
By 2024, Lesotho had become the second-largest exporter by value under AGOA and the third largest by volume, almost entirely driven by its textile and garment shipments, as per reports, which added that the industry racked up $237.3 million in exports to the United States that year, a remarkable figure for a nation of just over two million people.
Thousands of workers, most of them women, found stable employment in the sector, stitching garments destined for shelves across America. For a while, Lesotho’s economic narrative was one of steady progress and global integration.
But that story took a jarring turn after US President Donald Trump slapped a staggering 50 per cent tariff on Lesotho’s exports, only to reduce it to 15 per cent after a 90-day pause. But the looming threat of a 50 per cent tariff after the expiry of the 90 days sent shockwaves through the country’s economy, particularly its textile sector, as widespread uncertainty and concern gripped one of Sub-Saharan Africa’s top garment exporters.
Spooked by the looming threat of steep tariffs, American importers had already begun cancelling orders en masse, wary of escalating costs and growing uncertainty. Factory floors, once buzzing with activity, fell silent. The very lifeblood of Lesotho’s manufacturing sector began to drain away.
Layoffs followed, disproportionately affecting women who formed the backbone of the workforce, and the crisis escalated so quickly that the government was forced to declare a two-year state of disaster, citing a dramatic surge in unemployment over the country’s “high rates of youth unemployment and job losses” amidst uncertainty over US tariffs. For many families, livelihoods that had taken years to build disappeared almost overnight.
Although following the 90-day pause and considerable backlash, Trump eventually set the tariff at 15 per cent, it came too late for many businesses that had already borne the worst of the impact. Adding to the complexity, some neighbouring countries, considered Lesotho’s competitors, were offered tariffs lower than 15 per cent.
Trade Minister of the country did not mince words when he addressed this issue.
Interacting with the media, the minister reportedly underlined that the 15 per cent tariff for the textile industry was as good as 50 per cent, as he highlighted the impossibility of competing with regional players like Kenya and Eswatini, who continue to enjoy a lower 10 per cent tariff.
“Those are our direct competition,” the minister reportedly claimed, capturing the sense of frustration that has gripped the sector.
In global trade, where the difference of a few percentage points can determine profitability, even a marginal tariff can mean the loss of business to more cost-effective alternatives. What this episode lays bare is just how vulnerable smaller economies are to shifts in global policy, especially when their fortunes are tied so heavily to a single export market.
Fibre2Fashion News Desk (DR)
However, actual use of foreign direct investment (FDI) in the Chinese mainland declined during the same period, falling 5.7 percent year on year (YoY) to ¥161.45 billion ($23.43 billion), as mentioned in official ministry figures.
China established 8,631 new foreign-invested firms in the first two months of the year, up 14 per cent YoY, even as actual FDI inflows fell 5.7 per cent to ¥161.45 billion ($23.43 billion).
High-tech industries attracted ¥63.21 billion ($9.19 billion), rising 20.4 per cent and accounting for 39.2 per cent of total inflows, while investment from Canada and Switzerland surged sharply.
Sector-wise, FDI inflows totalled ¥47.52 ($6.90 billion) in manufacturing and ¥111.22 billion ($16.17 billion) in services, indicating continued dominance of the service sector in attracting foreign capital. High-tech industries remained a key growth area, drawing ¥63.21 billion ($9.19 billion) in investment, up 20.4 per cent year on year (YoY) and accounting for 39.2 percent of the national total.
In terms of source countries, investment from Canada and Switzerland recorded strong gains, surging 210 per cent and 41.3 per cent respectively compared with the same period last year, highlighting a shift in the composition of foreign capital entering the Chinese market.
Fibre2Fashion News Desk (JP)
In 2023, 73 per cent of APAC CEOs were optimistic about global economic prospects; however, it was down to 64 per cent in 2025. Globally, only 68 per cent of CEOs remain upbeat about this—the lowest level seen in four years.
APAC CEOs reported much more optimism in 2025 about the growth prospects of their own economies over the next three years, while confidence in global economic prospects dropped, KPMG said.
Optimism about their own country’s prospects was the highest in Australia and lowest in India last year.
About four-fifths of APAC CEOs also saw substantial growth opportunities for their organisations and industries.
Optimism about their own country’s prospects was the highest in Australia (90 per cent) and lowest in India (71 per cent) last year, a KPMG release said citing its latest annual ‘APAC CEO Outlook’.
The declining confidence of APAC CEOs in the global landscape also reflects ongoing uncertainty and volatility that has plagued the global markets, stemming from an evolving geopolitical landscape, persistent supply chain constraints and intensifying scrutiny on sustainability, KPMG noted.
Furthermore, about 80 per cent of APAC CEOs also saw substantial growth opportunities for their organisations and industries, in line with the global average.
In fact, in 2025, executives appear more certain that their companies are on an upward trajectory compared to the previous year: 61 per cent of respondents expect earnings to increase by more than 2.5 per cent this year, compared to just 52 per cent in 2024.
CEOs in Japan (76 per cent) are particularly optimistic about their earnings outlook compared to global and regional peers, reflecting its solid domestic demand and stable GDP performance.
This positivity is driving many in APAC to continue investing in their businesses, with executives noting that there is strong appetite for increased hiring (92 per cent) and mergers and acquisitions (87 per cent) over the next three years, and a substantial number (82 per cent) of APAC CEOs expecting to spend more than 10 per cent of their budgets on artificial intelligence (AI) in the next 12 months.
This clearly indicates that subdued global outlook has not dampened optimism around companies’ prospects in APAC, KPMG remarked.
Confidence in the growth prospects of the global economy is lowest among Chinese companies (58 per cent). This likely reflects, in part, the impacts of an uncertain tariff environment. Strained relations with its main export partner and uncertainty around global demand are likely some areas of concern among firms in China.
Global trade risks topped the minds of APAC CEOs last year, especially as geopolitical tensions and trade realignments dominated headlines. These trends have persisted in 2025, with supply chain resilience remaining a top three driver of organisational decision-making in the short term.
However, the landscape is shifting with the arrival of emerging technologies like generative AI. AI integration is the top issue driving APAC executives’ short-term decision-making, a notable contrast with global peers who are more focused on cybersecurity issues and supply chain resilience, KPMG added.
Fibre2Fashion News Desk (DS)
Strait of Hormuz disruption has unleashed a cascading cost shock across the textile value chain, from crude to fibre.
Indian PSF has surged 26.5 per cent while naphtha prices have spiked nearly 90 per cent, inflating feedstock costs.
The cotton–polyester spread has tightened to multi-year lows, while 31 force majeure declarations across Asian petrochemical plants intensify supply risks.
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