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)
The data showed that the decline was driven mainly by weaker domestic exports, with goods produced in the Netherlands down 8 per cent YoY. In contrast, re-exports to the US rose 3.9 per cent during the period. Exports to the US have fallen every month on a YoY basis since July, CBS said in a press release.
Trade flows were influenced by uncertainty around US import tariffs. In the first half of 2025, trade between the two countries continued to grow, possibly as companies advanced shipments ahead of announced tariff measures.
Goods exports from the Netherlands to the United States fell 4.7 per cent YoY to €27.5 billion (~$33 billion) in the first ten months of 2025, driven by an 8 per cent drop in domestic exports, according to CBS.
Re-exports rose 3.9 per cent, while tariff uncertainty weighed on trade.
Imports from the US increased 1.9 per cent to €48.1 billion (~$57.7 billion).
Meanwhile, imports from the United States rose 1.9 per cent YoY to €48.1 billion (~$57.7 billion) in the first ten months of 2025.
Fibre2Fashion News Desk (SG)
The Philippines’ economic growth for the third quarter (Q3) of 2025 has been revised slightly lower, with gross domestic product (GDP) expanding 3.9 per cent year on year (YoY), down from the preliminary estimate of 4 per cent.
Gross national income growth for the quarter was also revised to 5.4 per cent from 5.6 per cent, while net primary income from the rest of the world was adjusted to 16.2 per cent from 16.9 per cent.
The Philippine Statistics Authority has revised down the country’s third-quarter 2025 GDP growth to 3.9 per cent from an earlier estimate of 4 per cent.
Gross national income growth was also lowered to 5.4 per cent, while net primary income from abroad eased to 16.2 per cent.
The PSA said the adjustments reflect its standard, internationally aligned revision policy.
The Philippine Statistics Authority said the revisions were made in line with its approved revision policy, which follows international standards for national accounts updates.
Fibre2Fashion News Desk (HU)
Operating margin improved sharply to 10.8 per cent from 4.4 per cent in FY24, while adjusted EBIT margin increased to 11.4 per cent from 10.7 per cent, marking the third consecutive year of margin expansion. The net income from continuing operations more than doubled to $502 million from $210 million, with adjusted net income rising to $537 million.
Levi Strauss & Co has delivered a strong FY25, with net revenues rising 4 per cent to $6.3 billion and organic growth of 7 per cent, alongside sharp margin expansion and higher profitability.
Q4 saw 5 per cent organic growth, led by Europe, Asia and DTC, which accounted for nearly half of revenues.
The company expects mid-single digit growth and further margin gains in FY26.
Diluted EPS from continuing operations increased to $1.26 from $0.52 in the previous year, while adjusted diluted EPS rose to $1.34 from $1.24. The company generated $530 million in operating cash flow and $308 million in adjusted free cash flow. The company returned $363 million to shareholders during the fiscal, up 26 per cent YoY, LS&Co said in a press release.
In the fourth quarter (Q4) ended November 30, 2025, the company reported net revenues of $1.8 billion, up 1 per cent on a reported basis and 5 per cent organically compared with Q4 FY24. Growth was broad-based, supported by strong momentum in Europe, Asia and Beyond Yoga, alongside high-single digit comparable growth in direct-to-consumer (DTC).
Europe recorded reported revenue growth of 8 per cent and organic growth of 10 per cent, while Asia delivered growth of 2 per cent reported and 4 per cent organically. In the Americas, revenues declined 4 per cent reported but increased 2 per cent organically, with the US business flat on an organic basis. Beyond Yoga continued to outperform, posting reported growth of 37 per cent and organic growth of 45 per cent.
DTC revenues increased 8 per cent on a reported basis and 10 per cent organically, driven by strength across all regions. E-commerce revenues rose 19 per cent reported and 22 per cent organically, with DTC accounting for 49 per cent of total quarterly revenues. Wholesale revenues declined 5 per cent reported and were flat organically.
Operating margin in the quarter was stable at 11.9 per cent, while adjusted EBIT margin declined to 12.1 per cent from 13.9 per cent a year earlier due to tariff-related pressure on gross margins and higher adjusted SG&A expenses. Gross margin stood at 60.8 per cent versus 61.8 per cent in Q4 FY24. Net income from continuing operations was $160 million, with diluted EPS of $0.4 and adjusted diluted EPS of $0.41.
“Over the past few years, we’ve taken bold steps towards becoming a DTC-first, head-to-toe denim lifestyle brand,” said Michelle Gass, president and CEO of Levi Strauss & Co. “We are well on our way toward realising our strategic ambitions. We have narrowed our focus, improved operational execution and built greater agility across the organisation. As a result, we’ve elevated the Levi’s brand and delivered faster growth and higher profitability as reflected by our Q4 and full year 2025 results. While we still have important work ahead, the company is at an inflection point—emerging as a stronger, more resilient global business ready to define the next chapter of LS&Co.”
“We are sustaining our momentum, delivering 5 per cent organic growth in the fourth quarter on top of 8 per cent growth in the prior year. Our success in denim lifestyle has enabled us to expand our addressable market, positioning us for mid-single digit growth in 2026 and beyond,” said Harmit Singh, chief financial and growth officer of Levi Strauss & Co. “Our disciplined approach to converting growth into profitability has improved adjusted EBIT margin again in 2025 for the third year in a row, and we are on track to expand margins further as we strive toward 15 per cent. Our confidence in this trajectory is reflected in a new $200 million ASR program.”
Looking ahead, the company expects mid-single digit revenue growth in fiscal 2026 alongside further adjusted EBIT margin expansion, supported by continued DTC momentum, disciplined cost management and ongoing brand strength, added the release.
Fibre2Fashion News Desk (SG)
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