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Trump’s Return Raises Concerns Over Future of AGOA

Trump’s Return Raises Concerns Over Future of AGOA
Monday, 16 December 2024 16:56

Ending the trade preference program, which has consistently enjoyed bipartisan support in the U.S. Congress, seems unlikely. However, the next U.S. administration may choose to expand or restrict the program based on its economic and strategic priorities.

Donald Trump’s return to the White House has created uncertainty over the future of the African Growth and Opportunity Act (AGOA). The latter is a trade program established in 2000 that allows eligible sub-Saharan African countries to export around 1,800 products to the United States duty-free. Trump, known for his economic nationalism, has shown little support for free trade.

His recent promise to impose a 25% tariff on goods from Mexico and Canada—America’s top trade partners—and raise tariffs on Chinese products to 60% highlights his protectionist agenda. During his campaign, Trump also said he would apply tariffs of 10% or 20% on imports worldwide and 100% on products from BRICS countries. BRICS now includes Brazil, Russia, India, China, South Africa, Egypt, Ethiopia, Iran, the United Arab Emirates, and Saudi Arabia.

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With Trump’s “America First” policy firmly embedded in the new National Security Strategy (NSS), concerns are growing that AGOA could be abandoned. These fears are especially strong because the program is set to expire in September 2025.

However, experts say it is unlikely the program will be scrapped. In an article published on December 10 by the Council on Foreign Relations, Richard Morrow, an analyst at the Brenthurst Foundation, said the trade agreement with sub-Saharan Africa has always enjoyed bipartisan support in the U.S. Congress. In April 2024, a bipartisan group of U.S. senators introduced a bill to extend AGOA until 2041.

The analysis, titled “AGOA at a Crossroads,” also points out that the program survived Trump’s first term despite similar protectionist rhetoric. However, during his first administration, African exports to the U.S. under AGOA hit their lowest level—$8 billion in 2019, down from a record $66 billion in 2008.

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AGOA Product List Could Change

The automotive sector was particularly affected. Exports dropped from $1.5 billion in 2016 to $344 million in 2019 before recovering to $1.7 billion in 2023 under the Biden administration.

Mukhisa Kituyi, former Kenyan trade minister and ex-secretary-general of the United Nations Conference on Trade and Development (UNCTAD), expects the next U.S. administration to push for renegotiating AGOA rather than ending it entirely.

Kituyi told AFP that the United States wants stricter rules of origin to prevent companies from importing textiles from China or India, stitching them in Africa, and labeling them as ‘Made in Africa”.

Washington may also decide to limit the number of products covered under AGOA. The program has been a cornerstone of trade relations between the United States and sub-Saharan Africa for over two decades.

“The Trump administration could ask Congress to modify the act by removing certain product categories. Here the aim and justification would be to protect key U.S. industries. A likely victim in this scenario would be automotive imports, given Trump’s repeated portrayal of the sector as the poster child for U.S. economic decline,” said Richard Morrow.

At the same time, Trump’s unpredictable approach means the opposite could happen. His administration might expand the list of AGOA-covered products to include critical minerals. This is possible because, in 2017, Trump signed Executive Order 13817, which emphasized reducing the country’s vulnerability to disruptions in the supply of critical minerals amid an intensifying trade war with China.

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Finally, Trump’s pragmatic approach could see AGOA used as a tool to pressure eligible countries to align with U.S. interests or punish those seen as too close to China. A previous example supports this scenario. In 2018, the Trump administration suspended Rwanda’s duty-free textile exports under AGOA. This was in retaliation for Kigali’s decision to impose taxes on second-hand clothing imports, which flooded the market and hindered the development of Rwanda’s local textile industry.

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