The recent decision by the United States to include Kenyan exports, to its borders, as among those subject to a baseline tariff of 10% has sparked concerns among Kenyan manufacturers and exporters.
It looks to damage the trade relationship the U.S and Kenya have established for years, especially since the African Growth and Opportunity Act (AGOA) took effect in 2000. Trade with the U.S. has been largely favourable under the AGOA, which grants duty-free access for Kenyan exports such as apparel, coffee, and tea.
In 2024 alone, Kenya exported goods worth Sh95.26 billion ($737.3 million) to the U.S., with apparel alone accounting for 72% of these shipments. Meanwhile, Kenya imported Sh101.14 billion ($782.5 million) worth of American products, including petroleum, machinery, and pharmaceuticals, resulting in a modest U.S. trade surplus of Sh5.84 billion ($45.2 million).
According to the Kenya Association of Manufacturers (KAM), the new tariff, which is part of a broader shift in U.S. trade policy, risks to increase the trade deficit. Apart from forcing Kenyan firms to absorb unexpected expenses as a result, the additional cost that come with it will more likely make Kenyan exports less competitive in the U.S, thus reducing the revenue from the sector.
KAM is urging the government to engage in urgent bilateral discussions with the U.S. The main focus for the government apart from reviewing the 10% tariff to preserve Kenya’s export competitiveness, should be securing a transition clause for goods already en-route to the U.S. under previous terms and extending the current AGOA agreement past its September 2025 expiration.
In accordance to the association, such disruptions could be avoided with some diversification in trade partnerships. This offers an opportunity for the government to target new markets and forge new relationships that are more favourable for the economy.
For instance, negotiations with China, the Kenya’s largest trading partner, can be explored, taking an advantage of the fact that Asian giant will want to upstage the U.S. In fact, it also presents a chance to increase intra-African trade and strengthen ties with other African countries through the African Continental Free Trade Area (AfCFTA).
Additionally, KAM emphasizes the need for Kenya to enhance its global export competitiveness by reducing production costs and improving the business environment.
The coming months will be critical in determining whether the government can negotiate favourable terms with the U.S. or if it will need to recalibrate its trade strategy in response to shifting global dynamics. Nonetheless, one certainty remains, every country is now examining every possible way on how to reduce expenses and increase revenue.
