The worst of Trump's tariffs on trade has passed, says report

Financial market experts do not foresee further volatility from the United States (US) President Donald Trump’s tariffs. This is as the latest global outlook by Standard Chartered predicts trade consensus between America and the rest of the individual countries.

While previous reports, one of them authored by World Bank downgraded the growth of a majority of economies due to the tariffs, among them Kenya, Standard Chartered Chief Investment Officer for Europe, Middle East and Africa Manpreet Gill, insinuates that the worst effects of the tariffs have passed.

He says the debate on the effect of the tariffs has transcended beyond the possible economic losses and their resultant effect on the financial markets. “We are at the point of the debate where (we ask), where do we end up? That is more important,” he said.

The Global Economic Prospect Report by the World Bank published last month downgraded Kenya’s economic growth for this year to 4.5 per cent from an earlier 5.0 per cent, with one of the reasons being trade hiccups associated with the tariffs.

Outside of the East African Community, the US is Kenya’s largest trading partner.

“We are still in that ‘no man sort of zone’ in the middle, where we are coming close to expiry of these tariff deadlines but we don’t know yet what the final deal will look like for African markets or other major economies,” he said.

The 90-day pause on implementation of the tariff issued by President Trump elapsed on Wednesday.

On issuing the tariffs, Kenya’s exports to the country were slapped with 10 per cent levy against an existing African Growth Opportunity Act (Agoa) pact that allows for duty free entry of goods to the US.

President Trump’s administration extended this pause to August 1, 2025, issuing more threats to countries that are not cooperating. Vietnam and the United Kingdom have aligned as Kenya is still pursuing a win-win deal as earlier announced by the government amid the expiry of Agoa in September.

Mr Gill says there is a likelihood that most economies will align as Vietnam and UK have. Once this happens, markets will adjust and move on.

“At the end of the day, markets will move on quite quickly, he said. “And as long as we get past it, the final outcomes, not as bad as financial markets feared, then it is quite possible for markets to move past that.”

He said some tariffs as imposed by the US are bound to remain. “What is very uncertain is what level do they ultimately end up because we do not have as many deals yet. We will most likely find that out in a couple of months,” he said during the release of the bank’s second Global Market Outlook.

The outlook predicts the further weakening of the US dollar, documenting that the average of the infamous April 2, Liberation Day tariffs stand at 14.5 per cent, the highest since 1938.

“This is likely to hurt growth and lift inflation in the coming months, with expectations of higher inflation keeping the Fed from cutting rates until September,” the outlook says.

Standard Chartered Chief Executive for Kenya and Africa Kariuki Ngari said a weaker dollar supports returns across risk assets, particularly in emerging markets, which have long been core components of regional portfolios.

“This presents opportunities for growth in emerging markets like Kenya and Africa, making our markets more attractive to investors. We’ll leverage this trend to support economic development and provide innovative financial solutions for our customers,” he said.

The outlook notes that after the US-UK and US-Vietnam deals to smoothen the effects of their respective tariffs, one with the European Union is in the offing.

“Our base case is that most of the world will follow the US-UK trade pact and agree to a 10 per cent baseline US import tariff, with higher sectoral tariffs on strategic sectors such as steel, aluminium and semiconductors. Imports from China are likely to attract a higher tariff rate, around 30 per cent,” the outlook says.