Kenya's exports brace for Sh13b blow as Trump tariffs resume

Workers label pairs of finished jeans inside the United Aryan textile factory at the Export Processing Zone (EPZ) in Nairobi on February 4, 2025. (Photo by SIMON MAINA / AFP)

Kenya is bracing for the return of punishing US tariffs after failing to secure a trade deal during a 90-day negotiation window. This leaves exporters exposed to steep levies that threaten to upend a key trade relationship.

The Trump administration's self-imposed deadline for reaching trade agreements expires on August 1, when tariffs on Kenyan goods are set to increase to 10 per cent - a move that could reduce an estimated $100 million (Sh12.95 billion) from Kenya's export earnings.

Despite last-ditch negotiations, alluded to by Kenya's Foreign Affairs Cabinet Secretary Musalia Mudavadi, Nairobi has been unable to clinch an interim deal. It is joining a growing list of nations left scrambling as President Donald Trump's "reciprocal tariffs" policy takes hold.

Trump's White House had initially pledged "90 deals in 90 days" but has so far only finalised agreements with a few large nations, including the UK, Vietnam, and a fragile truce with China, each riddled with caveats.

Kenya, alongside other countries, now faces an August 1 deadline with little progress to show. "The President (US) has been clear-no more extensions," Treasury Secretary Scott Bessent said on CNN. "If you don't move things along, you boomerang back to your April 2 tariff level."

Trump himself doubled down on his Truth Social platform recently, declaring: "Tariffs will start being paid on August 1, ... No extensions will be granted."

The looming tariffs have sent shockwaves through Kenya's manufacturing sector, particularly its apparel industry, which relies heavily on duty-free access to the US under the African Growth and Opportunity Act (Agoa).

With Agoa set to expire in September 2025 and no clear renewal in sight, Kenyan exporters fear being priced out of the market.

The Kenya Association of Manufacturers (KAM)warned that the 10 per cent tariff would erase their competitive edge, putting at risk $72 million (Sh9.36 billion) in annual exports and 600,000 jobs.

"Contracts based on zero Agoa tariffs will collapse," KAM earlier said in a statement, urging Nairobi to secure an emergency exemption for goods already in transit.

Central Bank of Kenya Governor Kamau Thugge had earlier downplayed the macroeconomic impact, but estimated a manageable $100 million (Sh13 billion) export loss, while acknowledging the strain on businesses.

He had also pushed back against US allegations of currency manipulation, insisting Kenya's forex interventions were only meant to curb volatility, one of the burning issues the US wants Kenya to address.

As US trade tensions escalate, Kenya has deepened its economic ties with China, leveraging Beijing's expanded zero-tariff policy for African goods.

President William Ruto's April state visit to China yielded 22 new agreements, including infrastructure deals and pledges to boost Kenyan agricultural exports like coffee and avocados.

"China offers an alternative market at a critical time," said Trade Cabinet Secretary Lee Kinyanjui, even as he acknowledged the "challenges" posed by US tariffs.

The Trump administration's tariff push has drawn criticism from economists and allies alike. US Secretary of State Marco Rubio, however, defended the policy, arguing it was necessary to correct decades of US trade deficits.

"...these tariffs are being applied on a global scale. These are not aimed at one country or one region. It's all around the world. And it's very simple, okay? For 20 or 30 years, the United States has built up enormous trade deficits with multiple countries around the world, in every region...and that had to be addressed. And so that's what the President is doing."

"Now, obviously, those tariffs that he's announced will take effect on August 1, because markets need certainty. But there is always the possibility that before August 1, or at some point after August 1, we will reach arrangements with individual countries that changes those numbers in a positive way, but that takes some time to work on."

"So, that could happen. But by and large, this is not aimed at any one country. This is globalised. This applies to virtually every country in the world, because the trade deficit the US was running with too many countries was simply unsustainable. We had to address it. We had to address it."

But for Kenyan factory owners whose textile firm depends on US orders, the recalibration feels personal. "We built our business on Agoa," said a factory owner who sought anonymity. "Now we're just collateral damage."