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Supply Chain
Trump Must Decide Soon if U.S. Jeans Will Still Be Made in Africa
Congress supports an extension of AGOA, a U.S. trade law granting duty-free access to African goods. But uncertainty looms as the decision rests with President Donald Trump, whose trade skepticism could push buyers towards cheaper Asian alternatives.
The factory may be in East Africa, but the Wrangler and Levi’s jeans rolling off the production line are pure Americana, destined for U.S. stores like Walmart and JCPenney.
The United Aryan factory, on the outskirts of Kenya‘s capital Nairobi, exists for one reason: the African Growth and Opportunity Act (AGOA), a 25-year-old U.S. law that gives duty-free access to thousands of goods made on the continent, particularly clothes.
But AGOA will expire in September unless President Donald Trump agrees to extend it – a decision putting hundreds of thousands of African livelihoods on a knife-edge.
Though the program has bipartisan support, it’s going up against a president known for his free-trade skepticism. Adding to the pressure is a time crunch: to prepare for the year ahead, the United Aryan factory’s clients need to know by April if AGOA will survive.
United Aryan ships up to eight million pairs of jeans to the U.S. yearly, and millions more shirts and other items. It has also transformed a once dangerous area of the city, says CEO Pankaj Bedi, who adds that local gangs would often “steal everything down to the copper cables” when they first set up the factory in 2002.
“Today, you can see, it’s a well-developed community. We have 150,000 people who directly or indirectly depend on us. It has stabilized the whole socio-economics of the area,” he said.
Each day, thousands gather outside the gates, hoping to fill in for absences among the 10,000 staff. An average assembly line worker earns around $200 monthly, a decent wage in Kenya.
“Our families are happy, our children go to school, crime has gone down,” said Norah Nasimiyu, 48, a worker representative on the shop floor, surrounded by colleagues stitching pockets and slicing huge piles of denim.
The factory has faced major ups and downs, however. New global trade rules in 2005 swamped markets with Asian clothing. The 2008 financial crash and the Covid-19 pandemic almost flatlined the business.
“There were many times when we thought we should give up,” said Bedi. “But when you have 150,000 people dependent on what you do, you have a responsibility. Shutting down a business is a five-minute job, but to establish and create this kind of platform is not easy.”
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Workers sewing jeans at the United Aryan textile factory in Nairobi, Kenya.
(Simon Maina/AFP)
Time is running out!Now comes the biggest threat of all: will Washington renew AGOA? Without its duty-free benefits, U.S. buyers will likely turn to cheaper factories in Asia.Both Republicans and Democrats in Congress support an extension for at least 12 years, giving companies the long-term security to thrive. But all bets are off with Trump.
The factory and its clients need to know AGOA’s future by the end of March to plan for the coming season.
The U.S. benefits from Africa’s cheaper labor, especially in the cost-sensitive clothing sector, said Bedassa Tadesse, an economics professor at the University of Minnesota Duluth who has done extensive research on AGOA.“We have come to this stage where trade policy decisions are no longer based on cost-benefit analysis,” Tadesse says. One hope, he adds, is that Trump will see AGOA as a way of countering Chinese influence in Africa, especially after he axed billions in humanitarian aid.
Witney Schneidman, an AGOA expert with the Brookings Institution think tank, said there was “zero chance” the issue was currently on Trump’s radar.“It’s a small change in Trump’s worldview, but it’s very important as an instrument in U.S.-Africa relations, especially when we just lost virtually all our soft power by dismantling USAID,” Schneidman said.
Bedi, who has been involved in the talks as part of the Kenyan Association of Manufacturers, remains confident. “I think Trump will be favorable. America cannot produce what we are producing, so it has to find an alternative. Where better than Africa?” he said.
Time is running out, though. The factory and its clients need to know AGOA’s future by the end of March to plan for the coming season, or production lines will grind to a halt.
“Buyers have started to panic. We’ve been assuring them that it will be okay,” says Bedi. “Fingers crossed.”Source: The Africa Report
The factory and its clients need to know AGOA’s future by the end of March to plan for the coming season.
The U.S. benefits from Africa’s cheaper labor, especially in the cost-sensitive clothing sector, said Bedassa Tadesse, an economics professor at the University of Minnesota Duluth who has done extensive research on AGOA.“We have come to this stage where trade policy decisions are no longer based on cost-benefit analysis,” Tadesse says. One hope, he adds, is that Trump will see AGOA as a way of countering Chinese influence in Africa, especially after he axed billions in humanitarian aid.
Witney Schneidman, an AGOA expert with the Brookings Institution think tank, said there was “zero chance” the issue was currently on Trump’s radar.“It’s a small change in Trump’s worldview, but it’s very important as an instrument in U.S.-Africa relations, especially when we just lost virtually all our soft power by dismantling USAID,” Schneidman said.
Bedi, who has been involved in the talks as part of the Kenyan Association of Manufacturers, remains confident. “I think Trump will be favorable. America cannot produce what we are producing, so it has to find an alternative. Where better than Africa?” he said.
Time is running out, though. The factory and its clients need to know AGOA’s future by the end of March to plan for the coming season, or production lines will grind to a halt.
“Buyers have started to panic. We’ve been assuring them that it will be okay,” says Bedi. “Fingers crossed.”Source: The Africa Report