he African Growth and Opportunity Act (AGOA), which allows many exports from select sub-Saharan African countries to enter the United States duty free, is set to expire later this year. Lawmakers have been pondering an extension for years, but after the election of President Donald Trump and slim Republican majorities in Congress, extending AGOA further is now a potential political lightning rod. President Trump is obsessed with trade deficits, which by itself makes AGOA vulnerable: In 2023, the United States ran a trade deficit with AGOA countries of $13.2 billion. Complicating matters more, Trump is also focused on US-China strategic competition, and many AGOA countries are also much closer to China than the United States in terms of global sentiment, at least as expressed by their voting in the United Nations General Assembly.
These points notwithstanding, letting AGOA expire would be a mistake. AGOA’s contribution to the overall US trade deficit is tiny, and the reasons for it have little to do with factors like exchange rate manipulation or regulatory hurdles alleged to drive deficits with major US trading partners like China or the European Union. Rather, they are the logical outcome of trade between a massive, high-income economy with strong demand for natural resources and much smaller, capital-poor but natural resource–abundant ones. If the United States wants Africa to buy more US goods, it should be doing all it can to make Africans wealthy enough to afford US exports. AGOA makes participating countries better off. Ending AGOA would thus run counter to the Trump administration’s desire to address trade deficits.
Americans are rich. Africans are poor.
Explaining the modest US trade deficit with AGOA countries has to begin with recognizing this simple fact: Americans are rich and Africans are poor. There are almost 350 million consumers in the United States, and the vast majority of those consumers are high-income by global standards. Even when we adjust for purchasing power parity—which accounts for cost of living being vastly cheaper in most African countries[1]—the average African consumer has significantly less purchasing power than the average US consumer. So, they buy fewer and less expensive goods.
For example, the most popular personal vehicle in the United States, the Ford F-150, has an average new sale price of $50,000. The most popular new vehicle in Africa is probably the Toyota Hilux, which isn’t all that far behind, with an average price estimated in the high $30,000s. The bigger difference is overall demand: In 2023, Africans bought just over 1 million new light vehicles—on a continent of 1.5 billion people. In contrast, Americans, with over a billion fewer people, purchased 15 times as many. The amount US consumers spent on coffee in 2022—estimated at $110 billion—was greater than the GDP of all but 6 of Africa’s 54 economies.
Africa (mostly) exports raw materials. The United States (mostly) exports expensive manufactured goods.
AGOA was intended to help kickstart light manufacturing in Africa, a market long dominated by low-cost Asian producers. Yet Africa’s exports are still predominantly land-intensive raw materials: hydrocarbons, minerals, and food. This is particularly true of its exports to the United States, a rich country with a voracious appetite for precious metals and fossil fuels. In 2023, 85 percent of the US trade deficit with AGOA members came from three countries: South Africa, Nigeria, and Ghana. Would it surprise you to learn their number one exports to the United States are platinum (South Africa) and crude petroleum (Nigeria and Ghana)? The United States would still import these goods even if AGOA had never been established. And while Trump may be able to use the specter of tariffs to promote onshoring of manufacturing, no tariff will transport Africa’s oil and platinum resources to the United States. They are literally stuck in the ground.
While hydrocarbons have become a significant portion of US exports, accounting for 22 percent in 2022, US exports are still dominated by more capital-intensive manufactured goods. These patterns reflect basic comparative advantage. In order for the United States to export manufactured goods, it needs to import raw materials to make them. African countries import most of the capital-intensive manufactured goods they have, which is why many run persistent trade deficits themselves.
But because of the wealth disparity discussed above, African demand for comparatively expensive US manufactured goods is going to be less than US demand for raw materials, African or otherwise: There are simply more, and wealthier, consumers in the United States than in Africa, and the United States needs to import in order to export. African markets are dominated by Chinese and Indian manufactured goods because they are cheaper—cheaper to make and cheaper to own, in large part because these attributes are valued in their comparatively poor home markets as well. The United States isn’t competing with Indian Bajaj motorbikes—the steed of choice for Africa’s swarms of boda boda taxi drivers—for the African motorbike market because US manufacturers can’t turn a profit making $1,500 motorcycles. Even if they could, they are better off building the more profitable, expensive bikes that dominate the US market and being content to sell a handful here and there to the African consumers who can afford a Harley.
Africa’s market for imported foodstuffs is comparatively small—but growing
The United States does have a comparative advantage in the production of food, particularly inexpensive bulk commodities like wheat, rice, maize, and soy. These are a match for African consumers—at least in theory. But Africa is still a predominately rural continent, and the majority of Africans are still engaged in small-plot, subsistence agriculture, with their food needs mostly met by their own farms or local and regional markets, not by choice but because scant road and rail networks make distributing imported food into the hinterlands very costly. These infrastructural challenges are much more impactful and worse for Africans than they are for US exporters.
By 2050, Africa will become a majority-urban continent, and more of its consumers will be living in places better served by and integrated into global (and therefore US) agricultural markets. As Africa becomes wealthier and more urbanized, demand for US exports, agricultural and otherwise, will increase. This was the self-serving rationale for AGOA in the first place: helping African economies grow to the point where they could import more US goods.
Of course, this assumes China and other countries do not move into product spaces dominated by US producers. But whether they do or not, the die will not be cast by African consumers. And letting AGOA expire would be a strange way to encourage Africans to import more goods from the United States, especially now that US development assistance programs are being gutted.
At the margins, there may be room for AGOA members to increase imports from the United States. But the economic realities of both Africa and the United States mean that for the foreseeable future, the modest US trade deficit with AGOA members is likely to persist. Based on simple economic logic, it would be shocking if the situation were reversed. The best way for the United States to promote US exports in Africa is to help Africans be more able to afford them. Ending AGOA would not help in that endeavor.