The US backs down, but the damage is already done

On Thursday Trump said he'd raise the US import tariff on Lesotho 'only' to 15% instead of 50%. But factories have already started closing and the economy is in freefall.

Trump has backed down on his threat to impose a 50% tariff on Lesotho and some other low income African countries. The 15% tariff that he’ll instead impose on Lesotho on 7 August is still a disaster.

Factories were already closing and thousands jobs have been lost. Many of the US companies on which Lesotho relied for export immediately stopped sending orders. The knock-on effect on spending has depressed the economy. Nearly a third of people are unemployed and half already live in poverty.

Sometimes it’s hard for people in wealthy countries (which means the overwhelming majority of those who read Substack) to understand what international ‘poverty’ means.

It means that half of Lesotho’s population subsist on $3.65 a day taking prices into account. That’s what $3.65 would buy you in the US. Currently: a gallon of milk. It’s an unacceptably low standard of living.

The New York Times reports that Mpho, 36, “turned to prostitution” as a result of losing her job in a garment factory. “She can make just over $20 for a full night with a client” but said she’d “return to a factory job in a heartbeat”.

“It’s very stressful,” Mpho said. “There are a whole lot of us not working, and we are breadwinners looking after a lot of people”.

NYT, 1 August 2025, How the Threat of Trump’s Highest Tariff Derailed an African Nation

As I said in my last post, the impact via the garment sector is horrendous enough. But the double whammy from South Africa, which surrounds landlocked Lesotho, will make things even worse.

South Africa faces a 30% tariff from August 7, plus extra levies on cars, aluminium, steel and other major exports. Lesotho is highly dependent on its neighbour and many of its people work there. The cumulative effect will hit hard.

The overall impact of instability has already been devastating. Trump has changed his mind on the rates several times, as well as the timing. His unpredictably is almost as bad as the tariffs themselves.

Clothing manufacturers are notoriously fickle and cost-sensitive. At the merest sign of trouble they’ll switch production somewhere else. As soon as they heard about the tariffs they started reorganising production: 50% or 15%, it didn’t really matter. The harm had already been done.

Playing around with tariff levels and timings seems like a game to Trump. He’s seized on a lever in a playground and he’s waggling it back and forth to see what happens. He’s found it’s a powerful lever and he enjoys using it to manipulate others, particularly those who can’t fight back. But it’s not a game, it’s peoples’ lives.