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<blockquote><div class="quotetitle">Quote from <a class="profile-link highlight-moderator" href="https://lawguide.co.ke/understanding-law/legal-forum/profile/lawyer/">Lawyer</a> on April 10, 2025, 1:49 pm</div><div id="pl-3908"  class="panel-layout" ><div id="pg-3908-0"  class="panel-grid panel-no-style" ><div id="pgc-3908-0-0"  class="panel-grid-cell"  data-weight="1" ><div id="panel-3908-0-0-0" class="so-panel widget widget_sow-editor panel-first-child panel-last-child" data-index="0" data-style="{&quot;background_image_attachment&quot;:false,&quot;background_display&quot;:&quot;tile&quot;,&quot;background_image_size&quot;:&quot;full&quot;,&quot;background_image_opacity&quot;:&quot;100&quot;,&quot;border_thickness&quot;:&quot;1px&quot;}" ><div
			
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	<p>On April 5, 2025, the United States, under President Donald Trump, announced a new round of tariffs affecting global trade, including a baseline 10% duty on imports from 185 countries, with Kenya facing a potential cumulative tariff of up to 20%. This development, occurring amidst the impending expiration of the African Growth and Opportunity Act (AGOA) in September 2025, poses significant challenges for Kenya's economy, particularly its export-oriented sectors. This survey note provides a comprehensive analysis of the legal frameworks, economic impacts, and strategic responses, drawing on recent reports and expert opinions.</p>
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<p class="break-words" dir="auto">The tariffs are part of a broader US policy to impose reciprocal duties, with Kenya initially facing a 10% baseline tariff, as outlined in announcements from early April 2025.   The legal basis includes the AGOA, a 25-year-old legislation guaranteeing duty-free access for certain African goods, which is now uncertain. Kenya’s Principal Secretary for Foreign Affairs, Abraham Korir Sing’oei, noted that the tariffs may not be immediately applicable until AGOA lapses in September 2025 or is repealed earlier by Congress, adding to the legal complexity.</p>
<p class="break-words" dir="auto">The proposed Kenya-US Strategic Trade and Investment Partnership (STIP) aims to replace AGOA, but negotiations are ongoing, leaving exporters in limbo. The OECD warns that a 10 percentage point tariff increase could lead to a 0.3% global output fall and 0.4% annual inflation rise over three years, severely impacting poorer countries like Kenya.</p>
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<p class="break-words" dir="auto">Kenya's trade with the US in 2024 totaled $1.5 billion, with US imports from Kenya at $737.3 million, down 17.5% from 2023, and a trade surplus of $45.2 million. Textiles and apparel, key under AGOA, grew from $55 million in 2001 to $603 million in 2022, making up 72% of 2024 exports (Sh68.7 billion). The tariffs will make these goods more expensive, potentially reducing demand and disrupting contracts based on zero-duty rates under AGOA, as noted by KAM CEO Tobias Alando (<a href="https://nation.africa/kenya/business/how-trump-s-tariffs-will-hit-kenyans-4996544" target="_blank" rel="noopener noreferrer">Nation</a>).</p>
<p class="break-words" dir="auto">Other affected exports include tea, coffee, fruits, and flowers, previously tax-free, with competitors like Sri Lanka (44%), China (61%), and India (27%) facing higher tariffs, potentially offering Kenya a competitive advantage in tea. However, the overall impact is expected to reduce competitiveness, with PS Juma Mukhwana warning of risks to Export Processing Zones (EPZs) and attractiveness for US investors (<a href="https://nation.africa/kenya/business/how-trump-s-tariffs-will-hit-kenyans-4996544" target="_blank" rel="noopener noreferrer">Nation</a>).</p>
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<p class="break-words" dir="auto">The textile sector supports 180,000 jobs, with 82,771 direct in EPZs and 100,000 indirect across supply chains, all at risk of layoffs and closures. The decline in export revenues could reduce foreign exchange earnings, increase borrowing costs, and cause economic and socio-political tensions. KNCCI President Erick Rutto sees this as a wake-up call to build resilient brands and spur industrialization, suggesting long-term adaptation strategies (<a href="https://nation.africa/kenya/business/how-trump-s-tariffs-will-hit-kenyans-4996544" target="_blank" rel="noopener noreferrer">Nation</a>).</p>
<h4 class="" dir="auto"><strong><span style="text-decoration: underline;">Comparative Analysis with Other African Countries</span></strong></h4>
<p class="break-words" dir="auto">Kenya's tariff rate is relatively moderate compared to others, as shown in the following table:</p>
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<table dir="auto" style="height: 350px;" width="511">
<thead class="border-b border-primary/20">
<tr class="border-primary/10">
<th class="break-words">Country</th>
<th class="break-words">Tariff Rate (%)</th>
</tr>
</thead>
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<td class="break-words">Nigeria</td>
<td class="break-words">14</td>
</tr>
<tr class="border-primary/10">
<td class="break-words">Malawi</td>
<td class="break-words">17</td>
</tr>
<tr class="border-primary/10">
<td class="break-words">Zimbabwe</td>
<td class="break-words">18</td>
</tr>
<tr class="border-primary/10">
<td class="break-words">DRC</td>
<td class="break-words">11</td>
</tr>
<tr class="border-primary/10">
<td class="break-words">Zambia</td>
<td class="break-words">17</td>
</tr>
<tr class="border-primary/10">
<td class="break-words">Mozambique</td>
<td class="break-words">16</td>
</tr>
<tr class="border-primary/10">
<td class="break-words">Lesotho</td>
<td class="break-words">50</td>
</tr>
<tr class="border-primary/10">
<td class="break-words">Mauritius</td>
<td class="break-words">40</td>
</tr>
<tr class="border-primary/10">
<td class="break-words">Botswana</td>
<td class="break-words">37</td>
</tr>
<tr class="border-primary/10">
<td class="break-words">Algeria</td>
<td class="break-words">30</td>
</tr>
<tr class="border-primary/10">
<td class="break-words">Tunisia</td>
<td class="break-words">28</td>
</tr>
<tr class="border-primary/10">
<td class="break-words">Rwanda, Burundi, Eritrea, South Sudan, Sudan, Ethiopia, Uganda</td>
<td class="break-words">10</td>
</tr>
</tbody>
</table>
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<p class="break-words" dir="auto">Lesotho, facing a 50% tariff, is particularly hard-hit, with experts warning of a "death knell" for its AGOA manufacturing, predicting a 1% GDP impact within two years if privileges are lost (<a href="https://www.bbc.com/news/articles/cqx4w1yj1vdo" target="_blank" rel="noopener noreferrer">BBC News</a>). This comparison underscores Kenya's relatively better position but highlights the regional trade disruption.</p>
<h4 class="" dir="auto"><strong><span style="text-decoration: underline;">Government and Industry Mitigation Strategies</span></strong></h4>
<p class="break-words" dir="auto">Kenya’s Ministry of Trade is in talks with American trade officials to safeguard duty-free access. Strategies include pushing for STIP, seeking exemptions, and strengthening ties with China, India, UAE, and AfCFTA for broader markets (<a href="https://nation.africa/kenya/business/how-trump-s-tariffs-will-hit-kenyans-4996544" target="_blank" rel="noopener noreferrer">Nation</a>). Boosting cotton production, aiming to double land under cultivation from 104,000 acres, is another focus to support local textile growth, though importing mitumba (second-hand clothes) hampers this (<a href="https://nation.africa/kenya/business/how-trump-s-tariffs-will-hit-kenyans-4996544" target="_blank" rel="noopener noreferrer">Nation</a>, <a href="https://www.businessdailyafrica.com/bd/economy/how-mitumba-and-corruption-put-kenya-on-trump-tax-list-4989786" target="_blank" rel="noopener noreferrer">Business Daily</a>).</p>
<p class="break-words" dir="auto">There are opportunities in tea exports, given higher tariffs on competitors, suggesting Kenya could grow its US market share. However,  the tariff calculations "make no sense" and could reduce US influence in Africa, benefiting China, already the continent's biggest trading partner (<a href="https://www.bbc.com/news/articles/cqx4w1yj1vdo" target="_blank" rel="noopener noreferrer">BBC News</a>).</p>
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