Zimbabwe’s suspension of tariffs on US goods triggers debate

Business Reporter

THE recent move by the Government, to suspend 35 percent tariffs, previously levied on goods from the United States has triggered a robust debate, among economic players, with the National Competitiveness Commission of Zimbabwe (NCCZ) and economists imploring authorities to implement supportive measures, to avoid hurting local industries.

The suspension, announced last month, followed the imposition of an 18 percent reciprocal tariff by Washington on Zimbabwe’s exports and was a demonstration of Harare’s commitment to equitable trade and strengthened bilateral ties.

The NCCZ noted that the decision could unlock multiple benefits for local businesses through improved access to capital goods and modern technologies from the US.

“Removing tariffs gives Zimbabwean businesses the chance to import capital goods, machinery and plant equipment from the USA at a reduced cost,” said NCCZ.

“This reduces operational costs and enhances competitiveness, which is critical for achieving industrial modernisation as outlined in the Zimbabwe Industrial Reconstruction and Growth Plan (ZIRGP), National Development Strategy 1 (NDS1) and Vision 2030.”

NCCZ added that foreign direct investment would inject capital and skills into the local economy.

“Multinational firms would introduce global best practices and quality standards that boost the efficiency of local supply chains and integrate the country into global value chains,” the Commission said.

It further argued that businesses could expand into new markets through value addition and product diversification.

An example was cited in agriculture, where a sugar cane farmer could pivot into ethanol and molasses production to increase resilience and boost revenue. Additionally, firms were  expected to benefit from easier access to high-quality technologies, which could raise product standards and open up premium export opportunities.

“At a national level, this would improve Zimbabwe’s export potential, attract foreign direct investment and help shift from raw commodity exports to higher-value processed goods,” added NCCZ.

Economist, Tinevimbo Shava concurred, saying the move could trigger innovation and cost efficiency.

“Lower input costs mean businesses can diversify products, reduce consumer prices and compete more aggressively in local and regional markets,” he said.

The tariff relief was also seen as an incentive for American and global investors seeking entry into Zimbabwe’s markets.

“With fewer price distortions, Zimbabwe becomes a more attractive investment destination, especially in mining and manufacturing sectors, where infrastructure and input costs are key considerations,” Mr Shava said. However, the upbeat outlook was not universally shared, with economist Gladys Shumbambiri-Mutsopotsi, warning of significant downside risks for domestic manufacturers.

“Removing tariffs exposes local producers of import substitutes to unfair competition from more efficient US producers,” she said.

“Without adequate support, this could lead to job losses, business closures and the erosion of our industrial base.”

She added that sectors such as agriculture, textiles and food processing were particularly vulnerable, as they lacked the scale and technology to compete with US mass production.

“This could worsen our trade imbalance and increase dependency on imports, undermining industrialisation,” she added.

In response to the challenges, NCCZ, Mr Shava and economist, Dr Prosper Chitambara, jointly recommended that Zimbabwe adopt a phased approach to tariff liberalisation, especially for sensitive industries.

“A gradual phase-out allows time for local businesses to adjust and scale up productivity,” said Dr Chitambara.

He urged the Government to complement tariff suspension with targeted subsidies and tax incentives for vulnerable sectors, particularly small manufacturers and labour-intensive industries.

The trio also advocated for technology transfer programmes through partnerships between local and US firms, to improve domestic capacity and competitiveness.

In addition, they called for policies promoting local value addition by prioritising the importation of raw or intermediate goods over finished products.

“This ensures that we build domestic capabilities and capture more value in our agricultural and mineral exports,” said Mr Shava.

They further proposed trade diversification beyond the US market, enhanced export promotion measures and stronger institutional capacity at Zimra and ZimStat, to monitor trade dynamics and prevent unfair practices like dumping.

Encouraging innovation was also seen as key.

“We need to incentivise R and D and support innovation hubs, especially in agriculture, ICT and manufacturing,” said Dr Chitambara.

Stakeholders also recommended that Zimbabwe avoid unilateral trade reforms and instead pursue a harmonised approach under SADC and the African Union frameworks.

“Regional co-ordination gives member states greater bargaining power in trade negotiations with the USA and helps avoid the race to the bottom,” noted NCCZ.

While the tariff suspension may bring short-term gains through lower costs and improved access to US goods, analysts agreed that Zimbabwe must carefully balance its policy to avoid undercutting local industries.

“If done properly, this reform can support our Vision 2030 ambitions by enhancing competitiveness and attracting investment,” said Mr Shava.

“But without adequate safeguards, we risk industrial regression and economic vulnerability.”

The debate now shifts to the implementation stage, where the Government will be expected to tailor incentives, infrastructure and institutional support to ensure that the trade opening becomes a catalyst for inclusive industrial growth.