Geneva — The head of the World Trade Organization says a temporary tariff pause by the United States mitigates current trade contraction, but substantial downside risks persist, which can heavily impact Africa.
WTO Director-General Ngozi Okonjo-Iweala released the Global Trade Outlook at the WTO on April 16, warning of global dangers with the U.S. and China “decoupling” their economies.
She said at a press conference that the world’s merchandise trade volume will likely fall by 0.2 percent in 2025 under current conditions.
North America’s decline is expected to be particularly steep, and its exports are forecasted to drop by 12.6 percent, while Ngozi noted that some of Africa’s poorest countries, such as Lesotho, will be hard hit.
“A decoupling between the two major economies (the U.S. and China) could have far-reaching consequences if it were to contribute to a broader fragmentation of the global economy along geopolitical lines into two isolated blocks,” said Ngozi.
She said imposing “reciprocal” tariffs could lead to broader policy uncertainty, and these could trigger a sharper decline of 1.5 percent in global goods trade and hurt export-oriented least-developed countries (LDCs).
‘This is because Africa’s trade with the U.S. is relatively small’
“Exempting LDCs from all tariff increases would raise their exports, support their growth, and, in essence, help to create new markets,” said Ngozi.
She said that Africa’s economic outlook is broadly stable under current trade policies, with real GDP growth for the continent essentially unchanged, even if reciprocal tariffs are reinstated.
“This is because Africa’s trade with the U.S. is relatively small. The share of Africa’s exports to the U.S., as a percentage of its total exports to the world, is about 6.5 percent.”
Ngozi said the share of Africa’s imports from the U.S. of its total imports is around 4.4 percent, with differences across countries.
“Some countries, like Lesotho, are particularly vulnerable due to their high reliance on textile exports to the U.S. market,” she observed.
Such exports are about $240 million or 10 percent of Lesotho’s. GDP,
“Cote d’Ivoire is another example. The largest cocoa producer in the world has about $800 million in exports to the U.S.,” said Ngozi.
Vulnerable to smuggling
U.S. tariffs can make Cote d’Ivoire’s cocoa vulnerable to smuggling to neighbouring Ghana, an “unintended consequence.”
“By 2050, 25 percent of the world’s population will be in Africa, whilst the present trade situation is being sorted out,” Ngozi said.
The Nigeria-born WTO chief pleaded for possible tariff exemptions for most of Africa since this is where most least developed countries are found.
Africa has 32 of the 44 least developed countries (LDCs), and Ngozi said that the continent needs “more self-reliance.”
“The external environment has changed and is more adverse. Aid is drying up, and trade is becoming more politicized,” said the WTO chief.
“So there needs to be a focus on raising domestic resources, attracting domestic regional and foreign investments on faster and greater trade integration within the continent, such that intra-Africa trade is lifted well beyond the current 16 percent,” said Ngozi.
She noted that Africa imports an estimated $7 billion of textiles, and Lesotho’s $240 million could be absorbed within Africa.
