Trump's tariffs on Kenyan exports further weaken a wobbling economy

On Wednesday this week, I ventured into the once busy Buruburu shopping centre, nestled within Makadara and Embakasi West constituencies of Nairobi. For the newbies in town, Buruburu residential area represents not only a good reflection of the middle class households in Kenya, but also the rich heritage of the city’s Eastlands region.

It is in this hub where the late former President, Mwai Kibaki, launched his political career after successfully contesting for the Donholm constituency seat in 1963. It was later renamed into Bahati and presently Makadara constituency.

For many decades, Buruburu shopping centre was a bastion of economic activity, balancing among an ambient residential area, good entertainment and fine tastes laced with the rich cultural heritage and street life of Nairobi’s Eastlands area. While the city has grown in lips and bounds over the years with new middle class suburbs west of the Central Business District, along the Thika superhighway corridor and emerging neighbouring shopping centers, Buruburu remains a good barometer for the evolving economic dynamics of the city and the country in general.

It is this understanding that pricked my curiosity when I walked into the section of the shopping centre around the National Library in Buruburu to find about 85 per cent of the stores closed and the area looking completed deserted on what should be a busy Wednesday afternoon. About three years ago, this is a place you would have avoided if you are not a crowds person. The section was beaming with all types of small and medium sized businesses including imported clothes, utensils, furniture and eateries.

Business ladies

When I enquired from two veteran business ladies in the area, who have remained hanging on hope, on what happened that all the stores there are closed, they just laughed and asked if I was new in Kenya? One of them explained that she used to run two photocopiers on full capacity per day, but now can handily go home with Sh100. Many are the days that not a single customer would come knocking. According to her, one of her photocopiers has not depleted a single toner cartridge for a whole year now.

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Reflecting on what I was hearing from this elderly ladies on how they have watched their businesses and all they worked for sink into the abyss, I could not avoid wondering how many such stories are scattered all over the country. Yet, about three weeks ago, the President had an elaborate development tour in Embakasi West and Makadara constituencies.

In a similar vein, last week at a national conference with accountants in hotels in Malindi, I listened to similar stories of several stores that have permanently closed shop along Ngong Road, leaving once bastions on business activity looking ghostly. On a good month, I get to travel quite a lot to different parts of the country and these stories have become the norm rather than the exception.    

The question that remains to be answered is: does the President ever bother to listen and hear these stories from real people besides the paid crowds he addresses?

If it is true that the Kenya Kwanza policies have made the domestic operating environment for businesses quite difficult, then US President Donald Trump’s additional tariffs on Kenya’s exports to the US cannot have come at a worse time. This policy shift of the SA now turns the heat on medium and large businesses that export to the US markets.

The simple implication of the 10 per cent tariffs is that Kenyan exports into the US will become more expensive for consumers there. With a cloud of uncertainty surrounding the actual impacts of the tariffs to the US economy domestically, it is unclear yet as to how the American people would shift their consumption behaviours.

In the face of this changes, consumers are likely to cut down on their spending, and thus dampen demand for imported goods.

Notably, President Trumps comments that foreign leaders have stolen jobs, ransacked US factories and foreign scavengers torn apart America will likely influence his core support base and shape their consumer preferences. Unpresidential as the sentiments maybe from the leader of the free world, Trump’s partisan support base cannot be underestimated. To a great extent, his public comments are likely to influence how his supporters view other countries that the US does business with.

While Kenya’s top trade and foreign affairs officials have tried to down play the real impact of the new tariffs, arguing the imposed rate for Kenya is among lowest in Africa, that does not help anything. Such denials of the potential real impact of the tariffs can only breed another lackluster policy response and intervention on the part of the government, similar to the denial of the suffering of businesses within the local economy.

Imports from Kenya

For context however, according to the office of the Trade Representative of the US Embassy in Kenya, the US imports from Kenya in 2024 were $737.3 million (about Sh.95.1 billion at current exchange rates). This was a decline of about 17.5 per cent compared to 2023. On the other hand, the US exports to Kenya were $782.5 million (or Sh100.9 billion). This was an increase of about 61.4 per cent compared to 2023. Main exports from Kenya to the US are clothing, macadamia, coffee, titanium ores and concentrates, and black tea.

This statistics imply that even without the tariffs, Kenyan exporters to the US were already suffering. Implicitly, the suffocation of local businesses by President Ruto’s government through defective policies has not spared even those that target external markets. The argument that Kenya could take advantage of the lower tariffs comparative to other countries in Africa in a fallacy on account of two things.

One, it is not yet clear whether Trump’s tariff policies will be permanent or transitory for future administrations. Given, the reactions in the domestic market and retaliatory measures from other countries may force US authorities or future administrations to reverse Trumpism policies.

Two, the view that investors are likely going to shift manufacturing bases into Kenya simply on account of US tariffs and not reforms on the domestic business operating environment is far-fetched.

Investor decisions bear a long term outlook and include many other factors unique to individual countries. If indeed there is goodwill to cash in on this externally driven window of opportunity, this must be a strategic policy move that resolves our own instigated business woes that have squeezed local investors out of business.

Fake development tours, illusion of elites sharing power and public loot at the top as inclusive development, and official extravagance instead of strategic investments into the economy will not make real investors drooling for an investment pie in Kenya.

Unfortunately for Kenya and her African neighbours, they lack the economic and diplomatic wherewithal to counter Trump’s trade aggression towards them as individual States. Only a unified African Union response or a strong regional economic bloc counter may prick the attention of US authorities. For now a heavy truck is going downhill with no breaks!