Flag of Rwanda via Wikipedia
Unexpected title I know, usually we associate “trade war” with “China”, however, the Trump administration has given Rwanda until May 28th to reduce the tax on imported clothes (the US is a major exporter of second hand clothes to Rwanda – ever wonder what happens to those “clothes and shoes” that are donated to the parking lot donation boxes?)
Background:
In 2016, the East African Community (EAC) composed of Kenya, Tanzania, Rwanda and Uganda increased tariffs on used clothing. Specifically, Rwanda increased the duties by 20 cents to $2.50 per kilogram. This 20 cent increase is at risk of hurting Rwanda’s export benefits under the US African Growth and Opportunity Act (AGOA). The AGOA allows certain African countries (like Rwanda) duty-free access to the US market for 6,500 exported products. Since AGOA was passed, duty-free exports to the US from AGOA qualified countries have increased 400% to over 1.0 billion since the law was passed.
AGOA Products:
A full list of those products can be found here.
The Trump administration is threatening Rwanda with losing certain benefits under the AGOA after a compliant was filed last year from the Secondary Materials and Recycled Textiles Association (SMART), a US-based organization which represents companies that collect and resell Americans’ used clothing. SMART claims the Rwanda tariffs have a big impact on the $1 billion dollar used clothing export industry.
Arguments from both sides:
SMART claims the Rwandan tariffs hurt their business while poor Rwandans also claim the increased prices of second hand clothes in Rwanda impact their ability to buy clothes at affordable prices. However, Rwanda’s government claims an increase in second-hand clothing prices will make locally made Rwanda clothes more price competitive. If the tariffs increase second-hand clothing prices and move people towards purchasing new Rwandan made clothes, the Rwandan government claims more factories will be built, more jobs will be created and the economy will improve.
What will happen?
Check back on May 28th, I will update as soon as I find anything. If anything, I’m expecting China to fill the void. A cursory search on Alibaba for “used clothes in bales” shows lots of offerings targeted for export to East Africa and the general African market.