What Trump's new tariffs means for Kenya, other African countries

President Trump said the U.S. would, from April 5 at 12.01 a.m. (GMT), impose a 10 percent baseline tariff on all U.S. imports from 185 countries, including Kenya.

The 10 percent will be a "commencement tariff," which means there will be more or elevated tariffs for countries the U.S. feels have taken advantage of the American economy over the years.

Kenya will likely have a cumulative tariff threshold of twenty percent after the latest round of sweeping orders by Trump.

In anticipation of these elevated tariffs, Kenya’s Ministry of Trade said last week that they were in talks with American trade officials to safeguard Kenya’s duty-free or very favourable duty access for its goods into the U.S. market.

Trade and Industry Cabinet Secretary Lee Kinyanjui disclosed that the government is in ongoing negotiations with a team of policymakers from the U.S. to discuss the issue. He added that Kenya is keen to protect its textile exports to the U.S.

The U.S. is the country’s second-largest trading partner, in terms of the value of exports. Kenya charges the U.S. a 10 percent tariff on U.S.-sourced goods, and these reciprocal charges are set to affect Kenya’s total goods trade with America, which stood at $1.5 billion in 2024.

The executive order on minimum tariffs has a bearing on all exports from Kenya to the U.S., including products under the African Growth and Opportunity Act (AGOA), which saw Kenya export to the U.S. over 50 percent of duty-exempt goods and which is due to expire this year.

Over many years and under several U.S. administrations, Kenya has been a beneficiary of low import duties to the U.S., especially under the AGOA program.

Kenya is a party to the Trade and Investment Framework Agreements (TIFA), which saw the East African Community (EAC) sign a trade pact with the U.S. in 2008. Kenya was again incorporated into the pact that operationalized the Common Market for Eastern and Southern Africa (COMESA), signed with the U.S. in 2001, because Kenya is a member of both regional organizations.

In 2024, the total value of U.S. goods traded with Kenya stood at $1.5 billion, while its goods exports to Kenya in 2024 were valued at $782.5 million, up 61.4 percent ($297.8 million) from 2023. U.S. goods imports from Kenya in 2024 were valued at $737.3 million, down 17.5 percent ($156.7 million) from 2023. The U.S. goods trade surplus with Kenya was $45.2 million in 2024, a 111.0 percent increase ($454.6 million) over 2023.

Cascading tariffs with a base of ten percent for all countries trading with the U.S.

President Trump’s new executive order has put in place a cascading tariff system in which all tariffs start at a minimum of 10 percent and cascade upwards based on several factors, such as the balance of trade between the U.S. and a particular country.

The current rate of tariffs between the U.S. and a particular country will affect the tariffs, as well as whether there are retaliatory tariffs put in place by the countries affected. Kenya falls under countries with wide trade with the U.S. and will incur an additional 10 percent tariff, raising the total to 20 percent.

However, the U.S. will exempt incoming copper, pharmaceuticals, semiconductors, lumber, gold, energy, and certain specific minerals, which shall not be subject to reciprocal tariffs, according to the authorities in Washington, D.C. Kenya imports none of these exempt goods to the U.S.

The U.S. is Kenya’s second-biggest trading partner, in value of transactions, after Uganda.

The Observatory of Economic Complexity (OEC), which offers detailed global trade data covering over 500 subnational regions and thousands of products, says Kenya’s top export market is Uganda ($893M), followed by the United States ($838M), United Arab Emirates ($716M), Netherlands ($706M), and Pakistan ($520M) in the year 2023.

Also affected were several African countries that were slapped with the 10 percent tariff for accessing the U.S. market with their goods and produce. These, among others, are Rwanda, Burundi, Eritrea, South Sudan, Sudan, Ethiopia, and Uganda.

Trump imposed higher tariffs on Nigeria (14%), Malawi (17%), Zimbabwe (18%), DRC (11%), Zambia (17%), and Mozambique (16%). The tiny southern African nation, Lesotho, which levies a 99 percent tariff on U.S. goods, was hit with a 50 percent reciprocal tariff.

Other African countries affected include Mauritius, charged 40% as it charges the U.S. 80%; Botswana now to be charged 37% as it charges the U.S. 74%; Algeria to be charged 30% as it charges the U.S. 59%; and Tunisia to be charged 28%, as it charges the U.S. 55%. Washington said the new regime of tariffs would take effect on April 9.

Tariffs are taxes charged at the point of entry of goods imported into a sovereign country. Whoever is the importer then pays these tariff charges at the point of entry to the customs agency of the host country as a levy.

The tariff is charged as a percentage of a given product’s value. For instance, a tariff of 20 percent on a product of Ksh.1000 would incur a Ksh.200 tariff and hence make it more expensive than a local product of the same kind.

Tariffs are not only levied on finished goods but could also be levied on components and raw materials entering a particular country. Tariffs, therefore, could increase the cost of manufacturing significantly. Tariffs dissuade domestic would-be consumers from buying imported goods as they become more expensive due to the tax.

They are also a deterrent to trade, and as trade barriers, they constitute deliberate hurdles to international trade as they raise the price of imported products for both traders and, ultimately, consumers.

On the other hand, tariffs provide motivation for domestic manufacturers to produce more and for domestic customers to buy local produce, which are tariff-free and most probably cheaper.

There are countries that shy away from using tariffs but resort to using non-tariff barriers to trade, such as import quotas, licenses and permits, regulations, stringent safety standards, among others.

President Trump labelled the move to use trade tariffs “Liberation Day” for the United States of America. It aligns with his motto of “Make America Great Again” or “MAGA.”

President Trump hopes his expansive use of tariffs will cause American manufacturers to move production back to the United States and away from the cheap factories they had set up overseas, thereby ushering in a golden era for the U.S. economy.

As Trump’s tariffs start rocking the receipts from Kenya’s exports to the U.S., the first to feel the pinch will be the local Export Processing Zone industries, which would ultimately experience a decline in revenues and ultimately total closure as their revenues dwindle.

As AGOA also nears its end, it will be a matter of time before there will be massive lay-offs of workers and the eventual closing down of the affected industries.

Kenya’s trade value with the U.S., which is its second-biggest global trade partner, will plummet significantly, and this will result in less earnings for the government in terms of real foreign exchange. Ultimately, with a high debt portfolio, Kenya’s cost of borrowing will rise, and with this, the attendant economic and socio-political tensions.

The Organization for Economic Co-operation and Development (OECD) warned recently that in a scenario in which tariff rates are permanently raised by the U.S. and all of its trading partners by an additional 10 percentage points, global output could fall by about 0.3% by the third year after their introduction.

Global inflation could rise by 0.4 percentage points per annum on average over the first three years, and this will greatly affect poorer countries as the global economy contracts and financing becomes very costly.

America’s soft power through offering special trade mechanisms to poorer countries will be taken away, and each country will start negotiating with the U.S. while looking inwards—Kenya included.

Kenya might have to take seriously some of the ignored cards on the table, such as the intra-Africa trade pact, the African Continental Free Trade Area (AfCFTA), and this would spur trade among Kenya’s African neighbours.

The African Continental Free Trade Area (AfCFTA), a pact signed by 44 African Union member states in 2018, aims to create a single market for goods and services, boost intra-African trade, and strengthen Africa's position in global markets.

In the mid-1900s, tariffs made up almost 90% of the revenue for the federal government of the United States of America. President Trump’s tariffs may soon contribute way beyond the current two percent of federal government revenues.

But for struggling countries such as Kenya, the tariff taxes over a long time might mean a slide into recession as stock markets take a plunge; recession will be unavoidable in the medium to long term.

The tariff war sparked off by Trump will be a burden heaviest on struggling countries like Kenya, even as more analysts warn that the new tariffs could overturn global supply chains and hurt corporate profits for years to come.