Duty-free access to the United States has been restored, and the African Growth and Opportunity
Act (AGOA) has now been extended to 31 December 2028. For Lesotho exporters, this provides
the longest planning horizon they have had since early 2025.
It is nevertheless a planning horizon, not a guarantee. AGOA remains a unilateral United States
trade preference, eligibility remains conditional, and the events of the past eighteen months have
demonstrated how quickly the applicable tariff environment can change.
Lesotho exporters should therefore use the period to the end of 2028 to strengthen contracts,
customs and origin records, supply-chain controls and workforce processes rather than assume
that the problem has passed.
Where the position now stands
Between April 2025 and September 2026, Lesotho exporters had to contend with several
significant changes in the legal basis of United States import duties. The sequence matters
because the present position results from a combination of court decisions, the expiry of temporary
measures and the extension of AGOA, rather than from any bilateral guarantee of continued
preferential access.
On 2 April 2025, the United States announced an additional 50 percent tariff on goods from
Lesotho under the International Emergency Economic Powers Act (IEEPA), the highest country
rate announced at the time. The applicable rate was subsequently reduced to 15 percent from
August 2025.
AGOA then lapsed on 30 September 2025, temporarily removing the preferential treatment on
which much of Lesotho’s export sector, particularly apparel manufacturing, depends.
On 3 February 2026, AGOA was reauthorised to 31 December 2026 with retroactive effect to the
end of September 2025.
A further major change followed on 20 February 2026, when the United States Supreme Court held
in Learning Resources, Inc. v Trump that IEEPA did not authorise the President to impose the tariffs
in question.
On 24 February 2026, the United States imposed a temporary import surcharge under section 122
of the Trade Act of 1974. Section 122 permits such a surcharge for a maximum period of 150 days
without congressional extension. That measure expired on 24 July 2026.
Separately, on 23 July 2026, the United States Trade Representative announced final action under
section 301 of the Trade Act against 60 economies following investigations concerning their failure
to impose or effectively enforce prohibitions on the importation of goods produced with forced
labour. Additional duties of 10 or 12.5 percent, subject to particular qualifications and exemptions,
were imposed on the economies concerned.
Lesotho was not among the 60 economies investigated and was therefore not subject to those
additional section 301 duties.
The position improved further on 2 September 2026 when President Donald Trump signed
legislation extending AGOA to 31 December 2028.
The practical result is that goods of Lesotho origin which qualify for AGOA treatment can presently
enter the United States free of the ordinary customs duties from which AGOA provides relief and
without an additional Lesotho-wide tariff of the kind imposed during the preceding period. In the
apparel sector, the third-country fabric provision remains particularly important, provided all
applicable AGOA requirements are satisfied.
That is a materially better position than Lesotho exporters faced during much of the previous
eighteen months. It is not, however, permanent.
Five decisions deserve attention now.
Identify recoverable duties — and establish who is entitled to the benefit
Substantial duties were collected under the IEEPA tariffs which the United States Supreme Court
subsequently held were not authorised by that legislation. United States Customs and Border
Protection has established electronic procedures dealing with refunds arising from the decision.
There is also a separate issue concerning AGOA-eligible goods entered during the period when
AGOA had lapsed. That retrospective AGOA relief must not be confused with the IEEPA refund
process. United States Customs and Border Protection prescribed a 2 August 2026 deadline for the
retrospective AGOA refund procedure applicable to the relevant entries.
Any business considering recovery should therefore first identify which duty was paid, why it was
paid and which refund procedure applies. The fact that a duty was paid during the 2025–2026
period does not mean that the same refund mechanism or deadline applies to every entry.
There is then a separate commercial question: who should receive the economic benefit of a
refund?
The United States customs process generally operates through the importer of record or another
party recognised under the applicable Customs and Border Protection procedure. In many Lesotho
apparel transactions, the United States buyer rather than the Lesotho manufacturer will therefore
control the customs refund process.
That does not necessarily answer the contractual question.
A Lesotho supplier may in substance have carried some or all of the tariff cost through reduced
prices, credit notes, absorbed freight, cancelled orders or other concessions. Whether that supplier
has a contractual claim to share in a later refund will depend on the agreement between the parties
and the circumstances in which the original cost was allocated.
Exporters should therefore:
- identify affected shipments and the particular duties paid;
- establish the delivery and pricing terms applicable to each shipment;
- ask the United States buyer or importer whether any relevant refund process has been
pursued and, where appropriate, what has become of the refund; - review price concessions, credit notes and settlements concluded during the tariff period;
and - obtain transaction-specific United States customs advice where a refund or procedural right
may still exist.
The lesson for future contracts is straightforward: the agreement should determine not only who
pays a new duty, but also who benefits if that duty is later refunded.
Repaper contracts for the period to 2028 and beyond
The last eighteen months exposed an important weakness in many supply agreements.
A contract may identify who arranges customs clearance and pays duty at the border without
adequately determining who ultimately bears the economic cost if a new tariff is imposed or an
existing preference disappears.
An Incoterm is important, but it should not be treated as a complete answer to the economic
allocation of an unexpected tariff. Nor should businesses assume that a general force majeure
clause will excuse performance merely because a transaction has become substantially more
expensive.
New and renewed supply agreements should expressly address:
- whether the agreed price assumes continued AGOA treatment;
- what happens if AGOA treatment is unavailable when the goods enter the United States;
- a defined price-adjustment or renegotiation mechanism if duties change;
- responsibility for goods already manufactured or in transit when a new measure takes
effect; - liability for duty, interest and penalties resulting from a subsequent customs reassessment;
- entitlement to refunds, credits or reliquidations following a subsequent change in law or
court decision; - rights to accelerate, delay or redirect shipments; and
- termination or renegotiation rights where a tariff change makes continued performance
commercially unviable.
The end of 2028 itself requires planning.
An order may be concluded or manufactured while AGOA remains in force but enter the United
States after the preference has expired. Customs treatment will ordinarily depend on the legally
relevant customs event rather than simply the date of the supply contract or manufacture.
Contracts extending into 2029 should therefore deal expressly with the possibility that AGOA may
not again be renewed, or may be renewed on different terms.
Be able to prove origin before anyone asks
Duty-free access under AGOA is conditional.
Not every product exported from Lesotho automatically qualifies, and the fact that goods were
shipped from Lesotho does not itself establish their eligibility.
A valid preference claim depends, amongst other things, on the tariff classification of the goods, the
applicable rule of origin and compliance with the relevant statutory and customs requirements.
For apparel exporters, the third-country fabric provision remains commercially significant because qualifying apparel may, subject to the applicable requirements, incorporate fabric or yarn sourced
outside the region.
The benefit is valuable precisely because it is conditional.
Exporters should therefore maintain an audit trail capable of connecting finished goods to the
qualifying production process. Depending on the product and transaction, that may include:
- supplier declarations and purchasing records;
- bills of materials;
- fabric and yarn records;
- cutting, assembly and production records;
- required visa or certification documentation;
- transport and export documentation; and
- records linking individual shipments to the relevant Lesotho production facility.
A sensible internal exercise is to select a completed shipment and attempt to reconstruct the entire
origin file as though United States Customs and Border Protection had requested proof that day.
If the business cannot readily do so, the weakness should be addressed before an enquiry arises.
Supplier contracts should likewise contain appropriate warranties, record-keeping obligations,
information rights and, where justified, audit rights.
Where tariff classification or origin is genuinely uncertain, transaction-specific United States
customs advice should be obtained.
Treat forced-labour compliance as a market-access risk, not merely a reputational issue
The United States’ section 301 action in July 2026 materially changes the risk landscape.
The additional tariffs imposed on 60 economies followed findings concerning failures to prohibit, or
effectively enforce prohibitions against, the importation of goods produced with forced labour.
Lesotho was not among the economies investigated. That is favourable, but it should not be
mistaken for permanent protection.
AGOA eligibility is itself subject to statutory criteria and periodic review, including criteria
concerning internationally recognised worker rights. Separately, United States law permits goods
produced wholly or partly through forced labour to be excluded from entry irrespective of whether
the goods would otherwise qualify for preferential tariff treatment.
For Lesotho manufacturers and their suppliers, labour compliance is consequently connected to
market access as well as employment law and reputation.
Businesses supplying the United States market should consider:
- documented due diligence on material suppliers and labour intermediaries;
- contractual warranties dealing with forced and child labour;
- appropriate audit and information rights;
- reliable wage, working-hours and recruitment records;
- functioning grievance procedures;
- ecords capable of responding to a specific factory or supply-chain enquiry; and
- clear internal responsibility for managing a customs, customer or government enquiry.
The practical lesson from the 2026 section 301 process is not that Lesotho presently has a forced-
labour problem. It is that labour and supply-chain practices can now translate directly into tariff and
market-access consequences.
Manage recalls and recruitment under the Labour Act 2024
Improved market access and a longer planning horizon may cause some employers to reopen
production lines, recruit additional employees or invite previously retrenched employees to return.
Those decisions must be taken under Lesotho’s current labour-law framework.
The Labour Act, 2024 (Act No. 3 of 2024) came into operation on publication in the Gazette on 2
April 2024 and repealed the Labour Code Order, 1992.
Section 139(1)(c) recognises the operational requirements of an undertaking, establishment or
service as a potentially valid reason for termination. The Act does not, however, set out a detailed
retrenchment procedure comparable to every aspect of the previous framework.
Section 220(1) preserves provisions and instruments under the repealed legislation to the extent
that they are not inconsistent with the new Act. The Labour Code (Codes of Good Practice) Notice,
2003 therefore remains relevant in informing the standards of consultation, selection and fairness
likely to be considered in a retrenchment dispute. The Code should nevertheless be understood in
its proper status and read consistently with the 2024 Act.
A commercial recovery does not retrospectively cure an unlawful or unfair termination carried out
during the downturn. Equally, the manner in which employees are recalled or newly recruited can
create fresh disputes.
Selection criteria should therefore be rational, consistently applied and documented, particularly
where:
- only some former employees are invited to return;
- new employees are recruited instead of suitably qualified former employees;
- returning employees are offered materially less favourable terms for substantially the same
work; - fixed-term contracts are used for work which is in substance continuing; or
- selection may be affected by trade-union membership, participation in protected industrial
activity or another prohibited ground.
Before undertaking a significant recall or recruitment exercise, employers should review the
proposed process, selection criteria, communications and employment contracts against the
Labour Act and any applicable surviving instruments.
Twenty-seven months is a planning horizon, not a guarantee
AGOA remains a unilateral preference programme. Its extension to 31 December 2028 removes
the immediate expiry risk but does not turn preferential access into a bilateral guarantee.
Country eligibility remains subject to review, and the United States’ trade policy during 2025 and
2026 demonstrates that tariff conditions can change rapidly.
Boards, lenders and investors should therefore test forecasts against more than one scenario:
- AGOA continues to the end of 2028 and is renewed on substantially similar terms;
- AGOA is renewed but on materially different or more reciprocal terms;
- Lesotho’s eligibility or particular product benefits are restricted; or
- AGOA expires and ordinary United States tariff treatment applies.
The analysis should extend beyond the headline tariff rate to working capital, inventory exposure,
customer concentration, contractual commitments and the cost and practical feasibility of
redirecting production to other markets.
Market diversification, including opportunities within SACU and under the African Continental Free
Trade Area, should form part of that assessment rather than being postponed until the next trade
disruption.
None of this argues against investment or expansion on the strength of Lesotho’s restored access
to the United States market.
It argues for using the period to the end of 2028 intelligently.
Exporters that use the present window to close contractual gaps, investigate possible tariff
recoveries, verify origin and customs records, strengthen supply-chain and labour compliance and
place recruitment on a sound legal footing will be better positioned whether AGOA is extended
again or not.
The trade position can change quickly. Before acting on a particular shipment, tariff classification,
preference claim, refund, contract, employment process or investment, businesses should confirm
the current United States and Lesotho requirements and obtain advice appropriate to the particular
transaction.
Legal information disclaimer: This article is provided for general information only and does not
constitute legal, customs, tax, investment or other professional advice. Specific advice should be
obtained before taking action in relation to any export, tariff classification, preference or refund
claim, contract, employment decision or investment. United States trade measures and Lesotho
law are subject to change. Where necessary, advice on United States customs law should be
obtained from appropriately qualified United States counsel.
LEX Africa’s Lesotho member is Webber Newdigate. Please visit https://www.webbernew.com/ for
more information and updates.
