African Economies: The Juxtaposition of Tariffs and Development
By Veronica Movchan
Before President Trump’s recent reversion to isolationist foreign policies, the United States was working diligently to strengthen economic ties with Africa. The African Growth and Opportunity Act (AGOA), launched in 2000, guaranteed countries in sub-Saharan Africa an opportunity to engage with the American market by allowing export products to be tariff-free. Similarly, the Millennium Challenge Corporation (MCC) was established in 2004 to facilitate poverty reduction and economic growth in developing countries, including many in Africa. However, this approach recently changed. During the first week of April 2025, President Donald Trump issued extremely high tariffs on African countries. These tariffs vary: Madagascar faces a 47% tariff, South Africa a 31% tariff, Cambodia a 49% tariff, and so on. Trump’s executive order effectively ended the two foreign aid programs previously mentioned and will thus negatively affect African economies. Additionally, a month earlier, on March 10, 2025, the Trump administration canceled 83% of American aid contracts, a development that is detrimentally affecting the continent. If they are not already, new US tariffs and reductions in foreign assistance will significantly undermine development across the African continent by destabilizing key industries, reversing social progress, and increasing dependency on exploitative global relationships.
The effects of this shift are most visible in the industries that once relied on strong US trade partnerships to grow and employ millions. Tariffs threaten industries essential to growth and employment. Under AGOA, many African economies rely heavily on exports to the US. In Lesotho, for example, the garment industry is one of the country's largest employers and is deeply vulnerable. Likewise, Ivory Coast, the world’s largest cocoa producer, is facing a 21% tariff from the US, contributing to cocoa prices falling more than 10% in just one week. Over the past two years, cocoa prices have surged due to weather-related crop failures in top-producing countries like the Ivory Coast and Ghana. Nearly 6 million people who rely on cocoa production and trade are now at risk of losing income, food security, and stability. Just northeast of Ivory Coast, Nigeria, Africa's largest oil producer, relies on crude exports for 90% of its foreign exchange. Market reactions to the 14% American tariff on Nigerian goods and general distrust of US policy have caused oil prices in Nigeria to plunge, forcing the country’s central bank to sell nearly $200 million to stabilize the naira, Nigeria’s form of currency. These examples reveal how African economies, classified as peripheral by Wallerstein's World Systems Theory (a capitalist model of uneven development that classifies countries as core, semi-periphery, and periphery based on economic and political power), are structurally dependent on favorable trade with core countries like the US. Tariffs undermine this relationship by disrupting comparative advantage—the ability to produce goods at a lower cost. African nations like Ivory Coast and Nigeria have built export strategies around natural resources and agricultural commodities, but tariffs strip these industries of their competitive edge. Trade restrictions reduce foreign direct investment (FDI), as investors perceive greater risk and lower profitability in the regions, meaning that transnational corporations may withdraw capital or shift operations elsewhere, harming job creation and industrial development. Exporters in Ivory Coast worry that rising tariffs will push American chocolate companies to source cocoa from other countries, such as Ecuador, reducing demand for West African exports. Declining FDI not only stalls growth but also pushes vulnerable populations toward the informal economy, where labor is unregulated, untaxed, and unstable. This sector, already widespread across sub-Saharan Africa, will likely expand as formal employment opportunities diminish.
Beyond signaling a shift in US foreign policy towards isolationism, the tariffs and aid cuts actively destabilize key sectors of African economies. The reduction of US foreign assistance threatens crucial health, education, and infrastructure programs. Thousands have already been impacted: programs addressing HIV, tuberculosis, and maternal health can no longer provide life-saving care, worsening existing disparities. Health professionals in Ethiopia’s Tigray region have reported rising maternal and neonatal deaths, largely attributed to the collapse of healthcare access during childbirth. As the US provided more than a quarter of all development assistance to Africa, reductions will have severe consequences, increasing poverty and inequality. According to projections from the University of Denver’s International Futures platform, millions are expected to fall into extreme poverty, with “5.7 million more Africans” dropping below the $2.15 per day income threshold within just one year. This process will continue, resulting in almost 19 million more Africans considered extremely poor by 2030. While predictive, current rises in poverty, just a month after the aid loss, support these estimates. These aid cuts ripple through daily life, disrupting essential services that support health, education, and basic living conditions. Lower access to medical care, food, and schooling leads to rising rates of infant mortality, school dropouts, and chronic malnutrition—conditions that widen the development gap. Countries like Lesotho, where American aid supported HIV prevention, clean water, and school construction, may now regress. Girls and women are especially impacted, as the loss of health and education support damages progress towards the destigmatization of female health concerns and more. Limited female participation in formal labor markets and political systems will lead to further disenfranchisement. Also damaging countries’ progression through the Rostow Modernization Model (a theory that explains a country’s path to development through stages: traditional society, preconditions to take-off, take-off, drive to maturity, and age of high mass consumption), a greater number of skilled professionals may emigrate, contributing to the region’s brain drain. Numerous African countries are currently classified as traditional societies; loss of aid and trade difficulties will prevent transitions to stages like preconditions for takeoff and takeoff.
With reduced US support, African nations may turn to alternative powers like China, deepening dependency and reshaping global alliances. As a result of US trade barriers, African countries are likely to seek new partnerships or strengthen existing ones with nations like China, India, and the UAE. In 2024, China removed tariffs on exports from 33 African countries, a move that not only expanded its market share but also positioned it as a more attractive and reliable trade partner than the increasingly protectionist United States. Due to US trade barriers, the imbalance between Africa and China will likely grow, making African economies more dependent on Chinese markets and political goodwill. Further, dependability will make fluctuations in China’s economy immensely impactful, as China has become a vital market for African exports like oil, copper, cobalt, and agricultural goods. If Chinese demand drops, resource-rich countries such as Angola, Nigeria, Zambia, and the DRC risk sharp declines in revenue, growing budget deficits, and increased political or economic instability. This shift reflects dependency theory, as African countries, unable to industrialize independently due to colonial underdevelopment, now rely on stronger economies to sustain growth. Projects like the Belt and Road Initiative in Ethiopia and Angola exemplify China’s rising influence. While China’s loaning may have benefits, it puts Africa at risk of debt-trap diplomacy: debt-trap diplomacy refers to China’s strategy of extending large loans to countries like Ethiopia and Kenya, which creates financial dependency and allows Beijing to gain leverage when repayments become difficult. This process threatens country sovereignty and reinforces Africa’s position as a supplier of raw materials rather than a self-sufficient economy.
New US tariffs and reductions in foreign aid severely threaten Africa’s economic stability, social progress, and efforts toward sustainable development. By destabilizing key industries, reducing human development gains, and encouraging exploitative relationships, these policies undo years of advancement achieved through AGOA and the MCC. These setbacks endanger economic growth and jeopardize progress towards social progress. The reversal of American engagement in Africa represents an economic loss and a moral failure to uphold international commitments toward equitable development. To counter these outcomes, the US must reconsider its approach by reinstating trade access and restoring aid to ensure that progress in African nations is not reversed.