Trump and the African Growth and Opportunity Act

African Growth and Opportunity Act (AGOA) is a trade agreement that provides eligible Sub-Saharan countries with tariff-free access to the US market. This agreement was enacted by the US congress in 2000 and since then it has been at the center of US economic policy in Africa. The AGOA act is set to expire on the 30th of September 2025 and with Trump’s pushback on free trade, it is uncertain whether the act will be renewed again.

For two decades now the AGOA has allowed over 1,800 African products duty free entry to the US. There are about 32 countries trading with the US under the agreement. The AGOA agreement was enacted by president Bill Clinton in hopes that it would promote democratic ideals on the continent as well as open up the US market to diversified consumers. The projection of Africa as the fastest growing region in population and economy also influenced the creation of the agreement. By embracing trade relations with Africa, US policymakers were hoping for the region to begin diversifying its economies.

However, after two decades of being active the AGOA has received mixed outcomes and reactions. Initially, policymakers assumed the agreement was successful as the US saw an increase in imports of African products. In 2008 total African exports under AGOA peaked at 81%. Some countries were able to diversify their economies and benefit from AGOA, for example, South Africa’s automotive industry and the apparel industry across the continent were able to develop due to AGOA. South Africa’s automotive exports increased from  $195 million in 2000 to $1.8 billion in 2013. Furthermore, between 2010 to 2020 the apparel industry grew by 60%, that is about $1.4 billion which is double that of the 2000 decade. As evidenced by these figures, AGOA resulted in job creation and therefore its end would mean that numerous people on the continent would end up unemployed. Despite these impressive figures that showcase a net benefit to some African economies, AGOA has not been an immense success. A significant issue is that the agreement is not being used effectively and as a result its impact has been uneven across the continent. This is because only a select few countries have crafted policies that effectively utilise AGOA. Additionally, countries that have a more developed political economy are more likely to benefit from AGOA as they attract US investors and increase exports. Economic diversification is also an important factor, as only a few countries have diversified exports. Africa as a whole continues to struggle with economic diversification, hence it is not surprising that some countries on the continent are unable to effectively utilise AGOA due to lack of diversification. In fact, due to the lack of the aforementioned factors, some countries have not seen any benefits from AGOA.

Earlier this year, President Trump imposed a universal 10% baseline tariff on all countries. This move has been viewed to be a threat to the future of AGOA. This is especially true given that the US Congress is considering extending the agreement for another 16 years. With tiny Lesotho facing a 50% tariff there is a growing fear of what Trump’s plans are for future trade with Africa. In 2024 Nigeria and South Africa, the main beneficiaries of AGOA, exported only ‘1%  of GDP worth of exports to the US’. This raises the question as to whether AGOA has even had any significant impact on Africa’s external trade flow. Thus, it is uncertain how African states would react to its end. If Trump were to end the AGOA there would be short term unemployment in AGOA reliant industries like South Africa’s automotives and apparel production in Kenya, Lesotho and Ghana to some extent. It would also result in high costs of doing business. Other than these short term losses, does Africa really stand to lose much from the discontinuation of AGOA? Most countries on the continent are now prioritising trade relations with the EU and especially China. China has now surpassed the US as Africa's largest trading partner. Africa’s turn towards Beijing is definitely of concern to US policymakers, hence Trump has to tread lightly when determining US trade relations with Africa. Just recently, China announced its plans to remove tariffs on all 53 African countries. In 2023 China received $170 billion worth of African exports whilst the US received $39.5 billion worth of African goods in 2024. Additionally, the recent African Continental Free Trade Area (AfCFTA) will further elevate African economies through regional trade. Hence, Africa has options, whether AGOA continues or discontinues, the continent can continue to develop. The question is whether Trump is willing to risk economically isolating Africa, the world’s fastest-growing continent in both economy and population. That seems very unlikely.

Daniella Byishimo – Intern AACC