Trump imposes 10pc tariffs on Kenyan goods

Kenyan exports to the United States (US) are set to be hit hard after President Donald Trump announced a 10 per cent tariff on all goods from Kenya, citing ongoing trade imbalances and concerns over currency manipulation.

Under the new regime, Trump's executive order introduces a tiered tariff system. A baseline 10 percent tariff applies universally, but countries like Kenya, identified with larger trade deficits, will incur an additional 10 per cent tariff, raising the total to 20 per cent.

While this move impacts all exports, products under the African Growth and Opportunity Act (AGOA), of which Kenya is a beneficiary are expected to be most affected, jeopardizing a crucial aspect of Kenya's trade relationship with the US.

Before President ="https://www.standardmedia.co.ke/sports/amp/business/article/2001515218/us-tariffs-causing-anxiety-but-no-dramatic-economic-impact-imf-chief">Trump's latest tariffs<, Kenya had benefited significantly from low US import duties.

In 2023, for instance, approximately 56 per cent of Kenyan goods entered the US duty-free under the AGOA programme.

The remaining imports were largely exempt under the US Generalized System of Preferences (GSP) or Most Favoured Nation (MFN) status.

Consequently, the average US tariff applied to Kenyan imports was a mere 0.3 per cent.

The shock Trump ordered also allows for increases in response to any retaliatory measures, he said.

Tariffs function by increasing the cost of imported goods, making them more expensive for US consumers.

This can render these products less competitive compared to domestic alternatives, potentially leading to lower demand for Kenyan exports.

As a result, this may ultimately result in reduced export volumes and diminished economic opportunities for Kenyan producers.

This could lead to job losses, reduced foreign exchange earnings, and broader economic instability for Kenya.

Kenya has been negotiating a trade pact with Washington established during the Trump administration, which was later revised by the Biden administration but faced numerous delays.

This recent move by Trump places those negotiations in jeopardy.

The ="https://www.standardmedia.co.ke/health/amp/business/article/2001515214/tariff-man-trumps-long-history-with-trade-wars">Trump executive order< points to "non-tariff barriers," particularly scrutinizing currency practices, which places Kenya under increased scrutiny for potential manipulation. This additional tariff comes at a particularly challenging time for Kenya which is grappling with a balance of trade crisis.

"Increased reliance on foreign producers has left the US supply chain vulnerable," Trump stated on Wednesday night in a national address defending the tariffs as essential for "rebalance" in trade and support for US domestic manufacturing. He asserted that these tariffs are necessary to address perceived unfairness in international trade practices.

But the tariffs represent a serious setback for Kenya's US export-oriented industries, especially in agriculture and textiles, which are heavily reliant on the US market through the AGOA programme.