The World Trade Organisation’s rule is that a member country has to treat all trade partners equally. So what does removing tariffs on US goods mean? Photo: Tafadzwa Ufumeli/Getty Images
Chaos and sudden pivots have marked the diplomatic space since the return of Donald Trump as president of the US. The latest move is his decision to hit virtually all countries with increased tariffs on their exports to the US, ostensibly to “address the injustices of global trade, re-shore manufacturing, and drive economic growth for the American people”.
Lesotho was hit with a 50% tariff, the highest of all. Zimbabwe was slapped with an 18% tariff.
To date, Canada, China, Mexico and the European Union have imposed tariffs on a range of US goods in response. But one reaction stands out as highly unusual: Zimbabwe, a small and economically struggling nation, chose not to retaliate, but instead announced a suspension of tariffs on imports from the US.
Days after the Trump tariffs kicked in, Zimbabwe’s president announced on his X account that, “In the spirit of constructing a mutually beneficial and positive relationship with the United States of America, under the leadership of President Trump, I will direct the Zimbabwean government to implement a suspension of all tariffs levied on goods originating from the United States.”
The move by Zimbabwe — which is currently not even clear on what domestic legal instrument it is based — amounts to granting a privileged status on goods originating from the US.
Zimbabwe, just like the US, is a member of the World Trade Organisation (WTO), which governs global trade relations. A fundamental aspect of the WTO is that, under its rules, a member country is not allowed to discriminate between trade partners. If a special status is granted to one trade partner, the country is required to extend it to all members of the WTO. This is the so-called Most-Favoured Nation treatment/rule.
Put simply, Zimbabwe may not give to the US what it does not give to the rest of the members of the WTO, which includes virtually all nations. This is the cornerstone of the global trading order; it is designed to prevent discrimination or preferring one or more nations above others.
Exceptions to this rule allow for preferential treatment of developing countries, regional free trade areas and customs unions. But none of these exceptions apply to the case of Zimbabwe suspending tariffs on imports from the US. In essence, the move by Zimbabwe is a perversion of the concept whereby one would expect the richer trade partner to waive duties on the poorer partner, just as the US did with the Africa Growth and Opportunity Act, and whose application has been wiped out by the recent Trump tariffs.
Zimbabwe’s decision to suspend tariffs on US imports, while aimed at improving relations, could have significant and lasting effects on its economy, trade relationships and political standing.
Economic risks
At first glance, eliminating tariffs on US goods may seem like a win for US exporters, but it risks harming Zimbabwe’s already fragile domestic industries. Local producers, grappling with high production costs, could face stiff competition from cheaper US imports, further weakening Zimbabwe’s industrial base, which is already reeling from economic sanctions and hyperinflation.
Trade strain
This move could sour Zimbabwe’s relationships with partners such as South Africa and China, major exporters to Zimbabwe. These countries might demand similar tariff exemptions or seek to renegotiate trade terms, threatening regional trade agreements such as the African Continental Free Trade Area (AfCFTA) and Southern African Development Community. Zimbabwe’s actions could be perceived as undermining the principles of fair, non-discriminatory trade.
WTO complications
Zimbabwe’s decision may also run afoul of WTO rules, particularly the Most-Favoured Nation principle. The suspension of tariffs on US goods could provoke legal disputes and retaliatory actions from other countries, risking Zimbabwe’s standing within the global trade body.
Global trade instability
Unilateral trade decisions such as Zimbabwe’s could set a troubling precedent, signalling a shift away from multilateralism and toward bilateralism. This could destabilise the already fractured global trade system and encourage other nations to act outside established agreements, potentially unravelling the cooperative framework that has underpinned international trade for decades.
Political fallout
Domestically, the move could spark opposition from political factions and business groups concerned about Zimbabwe prioritising foreign relations over national interests. Internationally, Zimbabwe could alienate key regional partners, complicating its diplomatic efforts.
Revenue shortfalls
With tariffs traditionally a significant source of government revenue, Zimbabwe will face the challenge of finding alternative funding sources. This could mean raising taxes or introducing new levies, adding to the economic strain in an already difficult environment.
Africa’s trade integration
Zimbabwe’s unilateral tariff suspension may also jeopardise Africa’s economic integration, especially under frameworks such as AfCFTA. If other countries follow suit, it could lead to a fragmented trade landscape, undermining efforts for a unified continental market.
While Zimbabwe’s decision may appear to be a symbolic gesture aimed at improving relations with the US, it could have far-reaching consequences that transcend diplomatic niceties. Economically, politically and legally, the move may trigger a cascade of reactions from regional and global actors that could alter Zimbabwe’s trade landscape, international relations and standing in global trade institutions. As the country navigates this unprecedented scenario, the broader implications for international trade, global economic stability and Africa’s aspirations for economic integration should not be underestimated.
Dr Craig Moffat is a former diplomat and EM Hoza a serving diplomat.
