When the African Growth and Opportunity Act (Agoa) preferential trade agreement was established in May 2000, it was part of a broader suite of legislation and policy enacted by former president Bill Clinton’s administration to strengthen US trade ties with African countries.
The programme allows African countries to export products to the US tariff free but there are doubts about its future, in part or in whole.
According to research from the Council on Foreign Relations published in December 2023, the value of exports from Agoa-eligible countries to the US effectively tripled from $22bn to $61bn in 2000-10. Research collated by think-tanks estimates that by 2012 the agreement had indirectly contributed to creating 1.3-million jobs on the continent.
Champions of the agreement in US political and business circles often tout it as the country’s most effective strategic response to China’s influence in Africa, while deepening economic, trade and diplomatic relationships between Washington DC and dozens of African governments.
But critics of the agreement in Africa lament the sometimes arbitrary nature of exclusions from the preferential trade platform, citing the most recent example of Uganda’s exclusion in December 2023 in response to the passage of that country’s Anti-Homosexuality Act (while sweeping legislative measures aimed at restricting the civil liberties and freedoms of sexual minorities were passing in several states across the US).
The rapid deterioration in relations makes SA’s status in any version of a renewed Agoa agreement tenuous at best.
Other critics point to a stagnation in trade between the US and Africa since 2013 despite the agreement, amid the dominance of textile and apparel, and oil and gas exports, making the point that trade has been neither deep, nor diversified, nor reflective of modern economic realities.
Agoa-eligible exports account for 1% of all imports to the US. The agreement has always been more beneficial to African economies and more politically useful to the US than it has been crucial to bilateral relations.
Enter Donald Trump, the Tariff Man.
This year, Agoa must come up for renewal before Congress by September. Though the agreement has enjoyed strong bipartisan support, this year could break with that tradition completely.
The US president has been less than kind in his view and description of African countries generally and has targeted specific countries for ridicule and derision multiple times.
Trump sees any trade imbalances or deficits with the US’s partners as unacceptable and with already weak levels of reciprocal trade between the US and most African countries, it would be almost delusional to assume that he would support a renewal of the agreement as is. Moreover, his administration’s bulldozer approach to diplomatic relationships flies in the face of the reason Agoa was created. Republican legislators have shown little to no enthusiasm for pushing back against the White House on these fronts and that looks highly unlikely to change in the next six months.
Without a sea change in the Trump administration’s approach to trade and tariffs between now and September, Agoa may be scrapped altogether — possibly rescued from the ash heap by a future administration.
And Trump’s clear preference for cutting bilateral deals — heavily tilted in the US’s favour — could see Ghana and Kenya (both strategic military locations and partners) and possibly the Democratic Republic of Congo (because of its critical minerals deposits) fare better in any negotiations.
But in that light, everyone else should be considered chopped liver.
What about SA? The rapid deterioration in relations makes SA’s status in any version of a renewed Agoa agreement tenuous at best.
SA is the US’s largest trade partner in Africa by far — with US exports to SA totalling $5.8bn and SA exports to the US totalling $14.7bn in 2024, according to US Trade Representative data — compared with US-Nigeria bilateral trade at $9.9bn over the same period.
The loss of Agoa eligibility would be felt unevenly across the economy, with the agricultural sector likely to be hit the hardest given that of the $622m in agricultural exports to the US in 2022, 72% of those took place under Agoa.
The imposition of tariffs would also erode the competitiveness of automotive, food and beverage, and leather and clothing exports from SA to the US, possibly leading to cuts in production, output and ultimately jobs across all of Southern Africa.
All of this makes it all the more urgent for SA exporters to find alternative markets for their goods and for the government to aid and facilitate this. Or for other alternatives to be explored — be it a pre-emptive exit from the agreement or proactive messaging to diffuse the shock to investors’ confidence in the local market.
While Agoa accounts for only 2%-3% of all SA exports in any given year, the pain of nonrenewal or exclusion must be anticipated and prepared for.
• Stuurman is an independent political risk analyst.
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