Lesotho goods are once again entering the United States duty-free. The tariffs that had disrupted the Kingdom’s largest manufacturing sector for much of 2026 lapsed on 29 July, and the Ministry of Trade, Industry and Business Development has confirmed that preferential access under the African Growth and Opportunity Act (AGOA) has been restored.
For an industry that employs more than 30,000 people and sends the bulk of its output to a single market, the practical relief is obvious. The legal position, however, is more nuanced than the headlines suggest. The reprieve is the product of a time-limited statutory authority running its course, not a negotiated settlement and the underlying preference regime itself expires in five months.
What has changed
The tariffs that lapsed on 29 July were imposed in February 2026 under section 122 of the US Trade Act of 1974, following the United States Supreme Court’s rejection of the initial “reciprocal” tariff programme. Section 122 is a balance-of-payments measure. It permits the President to impose an import surcharge without a prior investigation or Congressional authorisation, but it is deliberately constrained: the surcharge is capped, and it lapses automatically after 150 days unless Congress extends it. No extension was granted, and the measure expired by operation of law.
The Ministry has confirmed two consequences for Lesotho exporters:
- AGOA preferences have been restored in full. Textiles, apparel and fisheries products re-enter the United States at zero duty, on the pre-tariff basis.
- Lesotho was not included in the further round of tariffs imposed on 24 July 2026 under section 301 of the Trade Act, which reportedly affects some 60 countries. Duty-free access therefore continues unqualified.
The distinction between the two authorities matters for planning purposes. Section 122 is temporary by design and expires on a fixed timetable. Section 301 measures follow a country-specific investigation into acts, policies or practices of a trading partner, and are neither automatic nor time-limited in the same way. Lesotho’s exclusion from the July round is a favourable outcome, but it is not a structural protection.
The AGOA cliff on 31 December 2026
The more significant exposure is now AGOA itself, which is due to lapse on 31 December 2026 unless renewed by the US Congress.
AGOA is a unilateral preference programme. It confers no enforceable entitlement on beneficiary countries or on individual exporters, and eligibility is reviewed annually against statutory criteria covering market-based economic reform, the rule of law, political pluralism, labour standards and the protection of internationally recognised worker rights. A beneficiary country can be removed by presidential proclamation, and preferences can be withdrawn on a product-specific basis.
The Ministry has indicated that the United States is consulting stakeholders on modernising AGOA, including possible amendments to the eligibility criteria and a greater emphasis on reciprocal, rather than unilateral, trade concessions. Lesotho is participating in those consultations. In parallel, the Lesotho National Development Corporation is pursuing US investment into the domestic textile value chain.
A move toward reciprocity would be a material change of character for the programme. Reciprocal frameworks typically require the beneficiary to open its own market, and often carry commitments on services, procurement, intellectual property, digital trade and dispute resolution. For Lesotho, and for manufacturers whose commercial models were built around one-way preferential access, that would reshape the compliance environment rather than simply extend the status quo.
What exporters and investors should be doing now
The immediate task is to convert the restored preference into secured commercial benefit, and to structure for the possibility that it is not renewed.
Confirm origin compliance. AGOA preferences are only as good as the exporter’s ability to substantiate them. As a lesser-developed beneficiary country, Lesotho benefits from the third-country fabric provision, which relaxes the ordinary yarn-forward rules for apparel. That flexibility depends on a properly operating visa arrangement and correctly completed origin documentation. Exporters should verify that their certificates, supplier declarations and production records will withstand a US Customs and Border Protection verification, which can be initiated well after entry.
Review the tariff and duty clauses in supply contracts. Many Lesotho manufacturers absorbed the 2026 tariffs because their contracts were silent on who bears a change in import duty. Buyer agreements, Incoterms allocations, price-adjustment mechanisms and force majeure or change-in-law clauses should be revisited now, while the commercial relationship is not under strain. A clause allocating tariff risk is far easier to negotiate before the risk materialises.
Plan for the December cliff in orders placed from Q3. Orders placed in the second half of 2026 for delivery in 2027 will be priced and shipped across the expiry date. Contracts should address what happens if preferential treatment is unavailable at the date of entry, including termination, repricing and inventory allocation.
Address the labour consequences properly. The retrenchments carried out during the tariff period, and any recall of retrenched employees as orders recover, engage the Labour Code Order 1992 and the Labour Act 2024 framework. Re-employment offers, selection criteria, severance calculations and consultation records all carry medium-term exposure, and disputes tend to surface after the commercial pressure has eased.
Structure inbound investment with the preference risk priced in. Investors entering the textile value chain on the strength of AGOA access should ensure that shareholder agreements, incentive arrangements and any concessions negotiated with government or the LNDC anticipate a change in the trade regime.
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Read the original publication at Mayet & Associates
