OPINION: Trump’s economic agenda and its implications for Kenya

Donald Trump’s return to the White House signals a shift in global economic and trade policies. His latest statement makes clear that his administration will focus on deregulation, domestic energy expansion, and a combative approach to international trade. For Kenya, these changes present both risks and opportunities. The challenge will be to navigate a U.S. economic policy that prioritizes domestic industries while reducing engagement with global initiatives.

Trump’s emphasis on “America First” suggests a retreat from multilateralism. Consequently, Kenya must prepare for reduced U.S. engagement in global development programs. His administration’s skepticism of international institutions may weaken funding for initiatives in Africa, including economic aid, health programs, and climate action.

However, Kenya’s strategic importance in counterterrorism and regional stability remains relevant. The U.S. will likely continue security cooperation, but Nairobi must ensure this partnership remains mutually beneficial. Trump’s hard stance on international trade could also lead to a renegotiation—or even the dismantling—of AGOA, a crucial framework that provides Kenya with preferential access to U.S. markets.

Trump’s focus on deregulation and increasing domestic energy production could lead to lower global oil prices. Kenya, a net importer of petroleum, may benefit from reduced fuel costs.

However, his call for rebalancing international trade suggests stricter conditions for countries exporting to the U.S. If AGOA is revoked or replaced with a more rigid bilateral trade agreement, Kenya must diversify its export markets to avoid economic disruptions.

Moreover, Trump’s criticism of the Federal Reserve and his push for the Treasury to “unleash lending” indicate a looser monetary policy in the U.S. This could lead to a stronger U.S. dollar, affecting Kenya’s currency stability. If capital flows shift towards a deregulated U.S. economy, Kenya may experience capital outflows, pressuring its financial markets.

Trump’s rejection of climate policies also carries implications for Kenya. His administration’s pullback from global climate financing could reduce support for Kenya’s renewable energy sector. Given that Kenya has positioned itself as a leader in green energy, it must seek alternative partnerships to sustain progress in this area.

Trump’s plan to “reignite American manufacturing” and focus on domestic production could lead to protectionist trade policies. This may impact Kenyan exports, particularly in textiles and agricultural products, which benefit from preferential trade terms. If U.S. businesses receive incentives to source goods domestically, Kenyan producers could face tougher competition.

However, a deregulated U.S. economy could indirectly benefit Kenya by increasing demand for raw materials and commodities. If Trump’s policies successfully lower inflation and boost consumer spending, global trade might see renewed momentum.

Navigating the Shift: Kenya’s Strategic Priorities Kenya must respond proactively to these shifts:

1. Strengthen Intra-African Trade: With the U.S. potentially restricting access to its markets, Kenya should accelerate efforts under the African Continental Free Trade Agreement (AfCFTA) to expand regional trade.

2. Diversify Export Markets: Kenya should look to Europe, Asia, and the Middle East to reduce reliance on U.S. trade preferences.

3. Maintain Diplomatic Engagement: While Trump’s policies may prioritize American interests, Kenya must leverage its strategic importance to negotiate favorable terms.

4. Prepare for Currency Volatility: With potential capital outflows and a stronger U.S. dollar, Kenya must enhance financial stability through prudent monetary policies.

5. Invest in Local Manufacturing: Given Trump’s protectionist stance, Kenya must develop its domestic industries to become less dependent on external markets.

Trump’s presidency brings renewed economic nationalism, a shift away from climate policies, and a transactional approach to foreign relations. Kenya must adapt by strengthening regional trade, diversifying economic partnerships, and securing its position in global markets. While Trump’s policies could create short-term volatility, they also present opportunities for Kenya to reinforce its economic resilience. The key will be strategic adaptation and proactive policy reforms to ensure continued growth amid global uncertainty.

[Timothy Kamau is a policy analyst specializing in political economy and international relations. He writes on Kenya’s strategic position in a changing global environment.]