Lesotho Gripped by Economic Crisis, Declares Two-Year State of Disaster Over US Tariff Fallout
The small, mountainous Southern African nation of Lesotho has taken the unprecedented step of declaring a national state of disaster, an emergency measure set to remain in effect until June 30, 2027. This drastic action, announced by Deputy Prime Minister Nthomeng Majara, underscores the severity of an unfolding economic crisis, primarily ignited by the disruptive impact of recently imposed US tariffs which have unleashed surging youth unemployment and widespread job losses across the country.
Lesotho, home to a population of just over two million people, is confronting dire economic hardship. Official statistics paint a grim picture, with a national unemployment rate hovering around 30%. However, the situation for its burgeoning youth population is even more critical, with nearly 50% of young people currently jobless. This unprecedented economic strain is directly linked to recent trade policy shifts initiated by the administration of US President Donald Trump.
In April 2025, the Trump administration announced a steep 50% tariff on goods imported from Lesotho. While this specific tariff rate was subsequently temporarily suspended, its initial imposition has already inflicted profound damage. Lesotho, whose primary exports to the US are textiles and clothing, found itself the hardest hit among all nations affected by these "reciprocal tariffs." In 2024 alone, bilateral trade between the two countries amounted to approximately $240 million, with the vast majority favoring Lesotho. However, the mere announcement of the tariffs, even with their subsequent pause, has severely disrupted investor confidence and caused American companies to abruptly cease placing new orders with Basotho manufacturers.
The textile sector forms the very backbone of Lesotho's economy, employing an estimated 40,000 people and historically contributing over 10% to the country's Gross Domestic Product (GDP) in 2023. The looming threat of a 50% tariff, even in its suspended state, has already precipitated mass layoffs, with some factories reportedly sending as many as 90% of their workers home on three-month unpaid leave. Industry reports are stark, indicating that as many as 20,000 jobs remain precariously at stake should these tariffs be fully implemented.
Deputy Prime Minister Majara emphasized that the declaration of a state of disaster, enacted under the nation's Disaster Management Act, is a critical step designed to mobilize urgent funds and resources for emergency interventions. The government's immediate strategic focus is on creating vital employment opportunities for its struggling youth, providing essential support to beleaguered local businesses, and cushioning the broader economy from further devastating shocks. This decisive move also serves as a potent warning to both the government itself and its international development partners that a "business as usual" approach is simply no longer a viable option for Lesotho.
Compounding the nation's economic woes is the deepening uncertainty surrounding the African Growth and Opportunity Act (AGOA). This cornerstone US trade initiative has historically granted eligible sub-Saharan African countries, including Lesotho, duty-free access to the lucrative US market for thousands of products. AGOA is currently slated for expiration on September 30, 2025, and Lesotho has been intensely lobbying for its crucial renewal. Without AGOA's extension, the country faces a potential calamitous double blow, with government estimates suggesting a potential loss of up to 40,000 jobs, which would further jeopardize its already fragile manufacturing base and essential export lifeline.
The declaration of a national state of disaster, extending until June 2027, starkly underscores the profound economic vulnerability of Lesotho. Its heavy reliance on textile exports and the critical importance of stable trade relations with key partners like the United States are now more evident than ever. The coming months are poised to be exceptionally crucial as Lesotho battles these significant economic headwinds and desperately seeks to implement robust strategies for diversification and long-term resilience.
