Tralac, 3 Octobre 2025
By John Suart

Will AfCFTA liberalisation cushion african countries against the end of AGOA?

This blog attempts to shed light on the question of whether the liberalisation of merchandise trade on the African continent – which is the stated goal of the AfCFTA – will help cushion the trade impacts of US tariffs and the end of preferences under AGOA. To answer this question, which we do using quantitative simulation techniques, we must first sketch the context, which involves describing the current upheavals in the trade order and their anticipated impacts on African countries.

The global trade landscape is undergoing a seismic shift, primarily driven by the United States’ adoption of a unilateral and protectionist ‘reciprocal tariff’ regime. This new policy, which includes a baseline 10% tariff on most imports and significantly higher duties for nations like South Africa (30%) and BRICS partners India and Brazil (50%), has effectively dismantled the 25-year-old African Growth and Opportunity Act (AGOA) framework and destabilized the rules-based multilateral trading system. The legal foundation of these tariffs, the International Emergency Economic Powers Act (IEEPA), is under challenge in US courts[1], injecting further volatility into an already uncertain environment.

African economies are therefore in the direct line of fire, facing dual crises from the expiration of AGOA on September 30, 2025, and the imposition of punitive tariffs. While a complete coverage of all the incoming US tariffs on African countries is beyond the scope of this article, these selected examples give an idea of what various African countries are facing[2]:

• South Africa: 30% (explicitly listed in Annex I).

• Countries at 25-30%: Tunisia (25%), Algeria (30%), Libya (30%).

• Large group at 15% (listed): e.g., Angola, Botswana, Cameroon, Chad, Côte d’Ivoire, DRC, Equatorial Guinea, Ghana, Lesotho, Madagascar, Malawi, Mauritius, Mozambique, Namibia, Nigeria, Uganda, Zambia, Zimbabwe.

• All others in Africa (e.g., Egypt, Kenya, Morocco, Ethiopia, Tanzania, Rwanda, Senegal, etc.) default to 10% unless and until annexed or otherwise modified.

Key sectors such as South Africa’s automotive industry, Kenya’s textile sector (supporting 660,000 livelihoods)[3], and Lesotho’s export-driven economy (mostly based on apparel exports) are at high risk of significant job losses and investment flight. The economic damage is concentrated in sectors that had thrived under AGOA, with severe consequences for employment and investment.

Here are three examples of the impact of these tariffs, from South Africa, Kenya and Lesotho:

In response, African leaders engaged in a last-ditch diplomatic push for a short-term AGOA extension[4] while simultaneously pursuing a strategic pivot toward self-reliance. This pivot is based around the African Continental Free Trade Area (AfCFTA), which has been championed as the continent’s primary buffer against external shocks. Boosting intra-African trade, which rebounded to $220.3 billion in 2024[5], is a top priority of the AfCFTA, supported by initiatives like the Pan-African Payment and Settlement System (PAPSS)[6] to reduce reliance on foreign currencies. Besides looking inwardly, African nations are also attempting to diversify their trade relationships to the rest of the world, with a notable turn toward China, India, and other emerging markets.

We should therefore ask the question: Will AfCFTA liberalisation help cushion the blow to African countries of the loss of AGOA preferences? This question assumes that AfCFTA is currently, or will soon become, an effective vehicle for trade liberalisation in Africa. However, significant challenges exist, inter alia:

Slow and uneven implementation: The implementation of the AfCFTA has been generally slow, with some countries lagging[7].

Stalled negotiations on rules of origin (ROO): A critical component for tariff liberalisation, the negotiation process on the rules of origin has stalled, especially for the vehicles and broad textiles sectors[8].

Persistent Non-Tariff Barriers (NTBs): High shipping costs, weak connectivity, and the lack of shipping lines and distribution hubs remain major challenges to intra-African trade[9].

Any analysis of the potential of the AfCFTA to expand trade connectivity within Africa thus needs to assume that these (and other) challenges will be overcome in due course. We attempt to answer the question by assuming at least partial continental liberalisation in a simulation of the AfCFTA and compare this with a simulation of US tariffs in place of AGOA[10].

When AfCFTA liberalisation is simulated, we find interesting outcomes. As for all trade liberalisations, there are always winners and losers. While South Africa, Namibia and Kenya are able to benefit from improved access to markets hitherto restricted to them, other countries such as Zimbabwe, Mozambique and Nigeria experience smaller gains and in some case, losses in certain sectors. The exact mechanism by which this happens is through changes in the value of trade. While the simulations show that Zimbabwe, for instance, is able to increase the volume of trade to partners such as Mozambique and Mauritius, the value of trade often falls due to price adjustment from market forces.

This is one of the outcomes of freer markets – that the forces of competition tend to equalise prices. Countries that have more competitive cost structures and are able to adjust production faster tend to benefit more from generalised improved market access. If the value of trade falls, despite an increase in volume, the impact on GDP can be negative.

A second simulation was performed, to compare AfCFTA merchandise trade liberalisation with US tailored tariffs on Africa (as per the list above). These results show that there are indeed beneficiaries – African trade partners such as China, India, France Germany and Italy all benefit from the reduction in the world prices of African traded goods. This happens due to competitive forces as their markets are throttled in the US. In addition, US trade partners Mexico, Canada, Japan and Brazil benefit, assuming they are not also tariffed, as they are able to sell their relatively cheaper goods into the markets that African goods have been priced out of.

Interestingly, the US does not benefit from the exercise but experiences a negative impact in terms of a welfare indicator – ‘equivalent variation’. A more relatable indicator is the volume of GDP, which shows a drop of more than three times that of the total of all African countries. So African countries experience welfare losses, loss in the value and volume of GDP and pressure on the world prices of their traded goods, but the instigator – the US – also experiences losses. International trade theory predicts that tariffs are negative in sum and these simulations confirm this result.

Finally – is the AfCFTA able to cushion the losses from the end of AGOA? The answer is no. If we net off the impacts of the end of AGOA from those of AfCFTA, there is still a negative net effect. While the AfCFTA is a worthy cause and will certainly lead to gains from trade, African economies remain competitive and not complementary, with intra-African trade patterns less developed than African trade patterns with the ROW. The countries that displace the US as export markets for African goods are not in Africa, they are in Europe, South Asia and the Far East.

The next few months will likely continue to be tumultuous for world trade, especially for African countries that are vulnerable to trade shocks originating in the rest of the world and over which they have no control. The best path would be for African governments to do their best to negotiate the best possible deals they can – as Lesotho has been doing[11]. Secondly, by resolving deadlocks in the AfCFTA negotiations and pressing ahead with intra-African liberalisation, at least some of the losses of the end of AGOA can be mitigated.

[1] Erasmus, G. and T. Hartzenberg. 2025 The lawfulness of Trump’s tariffs is still undecided. Tralac blog. Accessed from: https://www.tralac.org/blog/article/16900-the-lawfulness-of-trump-s-tariffs-is-still-undecided.html

See also: Atlantic Council. 2025. The Supreme Court’s decision on Trump tariffs will have lasting impact on US economic statecraft. Accessed from: https://www.atlanticcouncil.org/blogs/econographics/the-supreme-courts-decision-on-trump-tariffs-will-have-lasting-impact-on-us-economic-statecraft/

[2] The White House. 2025. Further modifying the reciprocal tariff rates. Accessed from: https://www.whitehouse.gov/presidential-actions/2025/07/further-modifying-the-reciprocal-tariff-rates/

[3] Business Daily. 2025. Which way for Kenya trade with US as AGOA ends in less than 30 days? Accessed from: https://www.businessdailyafrica.com/bd/opinion-analysis/columnists/which-way-for-kenya-trade-with-us-as-agoa-ends-5174156

[4] Reuters. 2025. African manufacturers in last-ditch bid to extend US trade programme. Accessed from: https://www.reuters.com/world/africa/african-manufacturers-last-ditch-bid-extend-us-trade-programme-2025-09-17/

[5] IOL. 2025. AfCFTA marks a turning point for Africa’s economy as intra-African trade hits $220bn. Accessed from: https://iol.co.za/business-report/companies/2025-09-04-afcfta-marks-a-turning-point-for-africas-economy-as-intra-african-trade-hits-220bn/

[6] https://papss.com/

[7] Mail & Guardian. 2025. African Continental Free Trade Area members urged to act faster. Accessed from: https://mg.co.za/business/2025-09-06-african-continental-free-trade-area-members-urged-to-act-faster

[8] Financial Afrik. 2025. AfCFTA: Rules of origin facing obstacles in the automotive and textile sectors. Accessed from: https://www.financialafrik.com/en/2025/09/06/afcfta-rules-of-origin-facing-obstacles-in-the-automotive-and-textile-sectors

[9] Daily News Egypt. 2025. African trade ministers meet in Cairo to push forward with AfCFTA. Accessed from: https://www.dailynewsegypt.com/2025/09/16/african-trade-ministers-meet-in-cairo-to-push-forward-with-afcfta/

[10] For these simulations, the author makes use of the GTAP model (http://gtap.org) with own augmented trade data for Africa.

[11] Reuters. 2025. US plans to extend Africa trade deal by a year, says Lesotho minister. Accessed from: https://www.reuters.com/world/africa/lesotho-says-us-plans-extend-africa-trade-deal-by-year-2025-09-24/