What Trump tariffs, new global economic order mean for Kenya

US President Donald Trump during the National Prayer Breakfast at the US Capitol in Washington, DC, on February 6, 2025. [AFP]

As the United States pivots inward, embracing protectionist policies under President Donald Trump, the rest of the world must reckon with a new economic reality defined by transactional trade relations, strategic tariffs, and recalibrated global alliances. For Kenya, the message is clear: The days of depending on generous market access to foreign economies, particularly the US, are numbered.

The global trade regime is undergoing a seismic shift. Free trade and open markets formed the cornerstone of international economic cooperation for decades. However, under Trump’s administration, that model is being challenged. Citing a need to correct the US trade imbalance, Trump has turned to tariffs—duties targeting imports from Canada, Mexico, China, and Colombia—as his primary tool of economic policy.

This marks a dramatic return to economic nationalism, reminiscent of the late 19th century. Trump draws from the legacy of President William McKinley, whose Tariff Act of 1890 raised taxes on imported goods to nearly 50 per cent. The difference is that today’s economy is more interconnected, and such unilateral actions create ripple effects far beyond US borders.

Trump’s economic advisor, Peter Navarro, has been vocal about what he perceives as the failure of classical trade theory. He critiques the so-called ‘J Curve’, which suggests that trade deficits naturally correct themselves through currency depreciation. Theoretically, when a nation imports more than it exports, its currency should weaken, eventually making its exports more competitive.

However, Navarro argues—and recent trends support—that this self-correction is not happening. Some countries have kept their currencies stable or artificially low despite massive trade surpluses. The US has repeatedly accused China of doing just that, fueling its persistent export dominance.

This policy worldview has direct consequences for global trade partners. Countries with trade surpluses with the US, such as Japan and China, are on the defensive. Others, like Kenya, which operates at a trade deficit, must brace for declining preferential access and increased scrutiny.

Kenya finds itself in a precarious position. Although the country exports high-quality textiles to the US under preferential programmes like African Growth and Opportunity Act, its domestic economy tells a different story. Kenya is also Africa’s largest importer of second-hand clothes surpassing even Nigeria, a country with a fourfold larger population.

This contradiction highlights a deeper policy failure: While Kenya participates in global trade, it has not built strong enough local industries or markets to sustain its economic ambitions. Over 180,000 Kenyan jobs depend on the textile sector, and any disruption in trade policy from the US could unravel those gains.

It is no longer tenable for Kenya to rely on the aggregate demand of other nations. Instead, the country must shift its economic policy inward—strengthening domestic production, stimulating consumption, and insulating itself from the whims of global superpowers.

To navigate this shift, Kenya needs a bold and integrated economic blueprint focused on four foundational pillars:

• Land: Complete land reforms to unlock land for industrial use and public infrastructure projects.
• Labour: Modernise and scale technical and vocational education, ensuring workers are equipped for evolving industry demands.
• Capital: Tackle high interest rates that limit Small and Medium Enterprises growth and suppress entrepreneurial momentum.
• Entrepreneurship: Encourage local innovation and support firms adding value through tax incentives, export diversification, and reduced bureaucratic friction.

Policy coherence and execution are crucial. Government leaders must internalise that long-term resilience lies not in external aid or trade preferences but in building a dynamic, self-sustaining economy. Kenya can become a beacon of industrial transformation in Africa only if it commits to structural reform and sustained policy discipline.

Trump’s tariffs are a symptom of a larger trend: Countries worldwide are becoming more inward-looking. Globalism is retreating, and economic nationalism is on the rise. Nations that fail to adapt will be excluded from the emerging trade order.

For Kenya, this moment is both a warning and an opportunity. It is a call to rethink the country’s role in the global economy and to invest aggressively in domestic development. Strategic partnerships, targeted industrial policy, and a recalibrated trade agenda can turn global disruption into a catalyst for growth.

But time is of the essence. The window to reposition is closing fast. Kenya must act now—or risk being left behind in a world that no longer plays by yesterday’s rules.

Mr Gichinga is the Chief Economist at Mentoria Economics. Ms Laila Denise is a public policy student