U.S. tariff pressure nudges Africa towards Asia, intra-regional trade
April 28, 2025781 views0 comments
Onome Amuge
Newly imposed tariffs by the U.S are inflicting disproportionate harm on African economies that have diligently integrated into global value chains under the established framework of a rules-based international trading system, according to analysts.
However , the unilateral trade actions are prompting a reassessment of trade strategies across the continent, accelerating a pivot towards Asia and a renewed focus on strengthening intra-African commerce.
Carlos Lopes, the former executive secretary of the United Nations Economic Commission for Africa (UNECA), argues that the U.S. administration’s decision to implement what it terms reciprocal tariffs signals a fundamental shift in U.S. trade policy. He noted that this move away from multilateral engagement towards a more transactional and economically nationalistic stance is undermining the efforts of African nations that have adhered to global trade norms.
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“What we are witnessing is the normalisation of unpredictability, a form of economic coercion disguised as fairness,” Lopes stated in an interview with Xinhua news agency. He stressed that these tariffs are fueling the fragmentation of the global trading system, compelling countries to pursue regional pacts and alternative alliances to mitigate the risks associated with reliance on single, potentially volatile, markets.
Lopes noted that Africa, which has been actively diversifying its international partnerships, will continue to shift its focus towards Asia, particularly the burgeoning economies of China and India, as well as the Gulf states and other regions.
In response to the evolving global trade landscape, Lopes urged African policymakers to urgently reassess their trade strategies, with a key priority being the reduction of dependence on single markets or trading frameworks that can be unilaterally reversed, as demonstrated by the recent U.S. tariff impositions.
“The old strategy of seeking preferential access to the markets of rich countries is becoming increasingly fragile and unreliable,” Lopes warned. He emphasised the imperative for African nations to intensify structural transformation within their economies and to accelerate the process of regional integration.
Lopes underscored the critical role of the African Continental Free Trade Area (AfCFTA) agreement in this new paradigm. He argued that AfCFTA should become the cornerstone of Africa’s development model, providing a strong platform for industrial policy formulation, investment coordination across the continent, and the upgrading of technological capabilities.
He also called for a mindset shift among African policymakers, urging them to move away from viewing integration into global value chains as the ultimate objective.
“The goal should focus on enhancing domestic value addition, investing strategically in regional infrastructure to facilitate trade and connectivity, and expanding economies of scale to strengthen the negotiating position of African countries on the global stage,” Lopes asserted.
According to financial services holding firm MCB Group, the new U.S. tariffs pose particular challenges for African countries that rely heavily on exports such as textiles, agricultural products, and minerals. This is as many African nations currently benefit from preferential trade arrangements like the African Growth and Opportunity Act (AGOA), which provides duty-free access to the U.S. market for a range of goods. However, the future of these benefits is now shrouded in uncertainty, with concerns mounting over whether the new executive order will supersede the existing AGOA terms.
MCB Group believes that by prioritising diversification of trade partners, deepening regional cooperation through AfCFTA, and building stronger economic ties with alternative global players, African countries can not only weather the current trade storm but also emerge as more robust and self-reliant economic entities.
The tariff upheaval has also raised concerns among international financial institutions regarding the broader implications for Africa’s economic development.
The International Monetary Fund (IMF) and other multilateral organisations have voiced concerns that a global shift towards geo-economic fragmentation, characterised by the emergence of competing trading blocs centred around major powers like the European Union, China, and the U.S, could have a particularly severe and detrimental impact on sub-Saharan Africa. The IMF predicts that this fragmentation could lead to a sustained decline in Africa’s real GDP, potentially hindering its ability to access crucial export markets and simultaneously facing higher costs for essential imports.
Against this backdrop of rising tariffs and increasing global trade uncertainty, analysts posit that there is a growing call for Africa to adopt a more proactive and inward-looking approach to its economic development.
The World Economic Forum (WEF), in its assertion, outlined several key areas where African nations can focus their efforts to achieve this transformation.
According to the WEF, African nations need to consider value addition as they can no longer afford to primarily function as exporters of raw materials while simultaneously importing finished products at higher costs.
The WEF also noted that this is an opportune moment for the aggressive implementation and full operationalisation of the African Continental Free Trade Area (AfCFTA). It noted that as global trade becomes increasingly unpredictable and the imposition of new tariffs disrupts traditional export routes, Africa must act swiftly to reduce its dependence on external markets and build internal resilience. According to the WEF, rather than passively waiting to absorb the negative shocks of global trade decisions made elsewhere, African economies can proactively take control of their own growth and development trajectory by deepening intra-continental trade ties.
The World Economic Forum also advised that in the face of rising global tariffs and the uncertainty surrounding international trade, African leaders must prioritise the crucial task of harmonising public procurement systems across the continent.
According to the WEF, given that public procurement accounts for a substantial portion of Africa’s overall GDP, estimated at around 17 per cent, this sector represents a largely untapped potential avenue for stimulating intra-African economic activity and concurrently reducing reliance on external markets for goods and services.
The WEF asserted that harmonisation of public procurement systems would create a more level playing field for African companies, enabling them to bid for government contracts in any member state without being burdened by redundant registration processes and differing regulatory requirements. This would, in turn, stimulate local production across the continent, strengthen regional value chains by fostering greater inter-African sourcing, and ultimately reduce the dependency of African nations on external markets for essential goods and services.
As Africa braces for the potential fallout from the sweeping new U.S. tariffs, Ngozi Okonjo-Iweala, the director general of the World Trade Organization, has also warned that the continent must accelerate its ongoing efforts to boost internal trade and reduce its over-reliance on global powers.
Speaking on the sidelines of the IMF and World Bank Spring Meetings in Washington D.C., Okonjo-Iweala, however, sought to downplay the immediate overall macroeconomic impact of the April 2 tariffs imposed by the U.S. administration led by President Donald Trump. She noted that currently, only a relatively small percentage of Africa’s total exports, approximately 6.5 per cent, are destined for the U.S. market, and an even smaller share of its imports, just 4.4 per cent, originate from America.
Despite these seemingly low direct exposure figures, Okonjo-Iweala cautioned that the broader picture reveals a deeper and more systemic vulnerability within the African trade landscape, which is that the continent is simply not trading enough, either internally among its own nations or externally with the rest of the world.
“We are not trading much, which is not a good thing,” she told reporters attending the high-level meetings. “And within Africa, a handful of countries are very severely impacted by these kinds of external trade shocks,” she noted.
Okonjo-Iweala highlighted the precarious situation facing Lesotho, a small, low-income country in Southern Africa, which could see its overall GDP growth shaved by nearly half a percentage point as a direct consequence of the new U.S. tariffs.
Lesotho’s economy is heavily reliant on its textile exports to the U.S., with annual exports in this sector reaching approximately $200 million, while its imports from the U.S. are minimal, amounting to just $3 million in return. Under the new U.S. reciprocal tariff regime, Lesotho’s outbound goods now face levies as high as 50 per cent, posing a threat to its primary export industry.
“If those tariffs are implemented as planned, Lesotho stands to lose a substantial portion of its exports to the U.S.,” Okonjo-Iweala warned, adding that even if the country manages to gain some marginal increases in exports to other markets, the net economic loss is likely to be significant and damaging.
The WTO DG also pointed to the challenges facing key West African economies including Nigeria, Ghana and Côte d’Ivoire. Ghana has been hit with a 10 per cent tariff on certain exports to the U.S., while Côte d’Ivoire, a major agricultural powerhouse that exports nearly $1 billion worth of cocoa to the U.S. annually, now faces a 21 per cent duty on its primary export commodity.
Okonjo-Iweala cautioned that such punitive measures could severely destabilise West African economies that are heavily reliant on a narrow range of key exports for their foreign exchange earnings and overall economic stability.
While making a direct appeal to the U.S to carefully consider granting exemptions for the poorest and most vulnerable nations in Africa from these newly imposed tariffs, Okonjo-Iweala also stressed that the continent cannot afford to simply wait for external leniency or policy changes.
“Aid flows are increasingly disappearing. What Africa urgently needs now is substantial and sustainable investment, not just traditional development assistance,” she asserted.
To achieve this greater self-reliance and attract the necessary investment, Okonjo-Iweala emphasised the urgent need for African nations to aggressively mobilise domestic resources, streamline often cumbersome and inefficient regulatory bottlenecks that impede trade and investment, and, above all, to deepen intra-African trade, which currently accounts for a relatively low 16 per cent to 20 per cent of the continent’s total commerce.