Namibia warns of threats to trade, govt revenue posed by US tariffs

Windhoek, Aug 20 (IANS) Newly-imposed tariffs by the United States could weigh heavily on Namibia's trade balance and government finances, particularly threatening the country's polished diamond exports, Bank of Namibia Governor Johannes Gawaxab warned on Wednesday.

Following a monetary policy dialogue, Gawaxab said that the US decision to impose a 15-per cent tariff on polished diamonds may reduce export volumes and erode government revenue, Xinhua News Agency reported.

Diamonds, which contribute roughly 10 per cent of gross domestic product (GDP) and over one-fifth of export revenues, remain one of Namibia's most critical sources of foreign exchange and public income.

Gawaxab noted that while uranium, a key export commodity for Namibia, is exempt due to its strategic importance to the United States, other commodities such as marble and salt now face higher costs and reduced competitiveness in the US market as a result of the tariffs.

The governor cautioned that the trade measures come at a time when Namibia's economy is already slowing, with GDP growth projected at 3.5 per cent in 2025, down from 3.7 per cent in 2024.

According to the central bank, industry stakeholders at the monetary policy dialogue echoed concerns, warning that the tariffs could dampen Namibia's export competitiveness in the short term, while urging continued dialogue to help exporters navigate the challenges.

The United States imposed new tariffs on imports from most African countries, including Namibia, effective August 1, under its reciprocal trade policy.

Meanwhile, Namibia's mining sector held firm in July as uranium output surged 36 per cent year-on-year, supported by stronger gold production and a monthly rebound in diamonds, the Chamber of Mines of Namibia said Tuesday.

In its monthly mining update, the chamber said uranium has maintained its role as Namibia's top export commodity, accounting for 29.3 per cent of the country's exports in May, valued at 3.45 billion Namibian dollars (about 196 million US dollars), the bulk of which was shipped to China.

According to the chamber, gold production rose 7 per cent in June compared to both the previous month and a year earlier.

At the same time, international gold prices averaged 3,352 US dollars per ounce in June, 44 per cent higher than the previous year, strengthening Namibia's export earnings, the chamber said.

Meanwhile, diamonds showed a 24 per cent monthly rebound in production during June, but annual output remains in decline, the chamber said, adding that prices have fallen 45 per cent since 2022 due to oversupply and competition from lab-grown alternatives.

The chamber said the gemstones made up 10.2 per cent of exports in May, with sales largely to Botswana, the United Arab Emirates, and Belgium.

However, it warned that the recent reduction of US tariffs on Namibian exports from 21 per cent to 15 per cent still creates uncertainty for exporters because of frequent changes in policy.

It noted that while the latest adjustment offers some relief, the lack of stability in tariff regimes makes it difficult for Namibian producers to plan ahead and secure long-term trade agreements.

--IANS

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