Africa’s top garment exporter could fold under US tariffs, minister says - Financial Times

Ethiopia's position as Africa's dominant garment manufacturing hub faces unprecedented pressure following escalating US tariff threats, with government officials warning of potential industry collapse. This development carries significant implications for European investors currently diversifying textile production away from Asian markets and into East African supply chains. Ethiopia has emerged as a continental manufacturing powerhouse, accounting for approximately 40% of Africa's garment exports and employing over 800,000 workers across hundreds of factories. The sector's rapid expansion since the mid-2000s was driven by competitive labor costs, preferential trade access through the African Growth and Opportunity Act (AGOA), and infrastructure investments concentrated around industrial parks in Addis Ababa and Hawassa. Major multinational brands including H&M, Tommy Hilfiger, and PVH have established significant production footprints there, with exports valued at roughly $3.5 billion annually. The tariff threat emerges amid broader US trade policy uncertainty and rising protectionism. Ethiopia's competitiveness fundamentally depends on AGOA preferences, which waive duties on qualifying African products. However, the country's textile sector operates with razor-thin margins typically between 3-5%, leaving minimal buffer against tariff impositions. A 15-25% tariff implementation would immediately render numerous contracts unprofitable, potentially triggering factory closures and mass unemployment. For European investors, this scenario presents both acute