The Kenya Association of Manufacturers (KAM) has conducted a thorough evaluation of the implications arising from the recent increase in tariffs imposed by the United States and its potential effects on Kenya–US trade relations.
According to data from the United States International Trade Commission (USITC), Kenya’s exports to the United States in 2024 totalled US$737.3 million. Notably, apparel accounted for approximately 72% of this figure, contributing US$533 million. Other significant exports included coffee, black tea, fresh agricultural produce, home décor items, and handicrafts.
During the same period, Kenya imported goods worth US$782.5 million from the United States, predominantly comprising petroleum products, capital goods, aircraft and aircraft parts, industrial machinery, and pharmaceutical products. This underscores a relatively balanced trade relationship, with the United States posting a modest trade surplus of US$45.2 million.
Kenya’s access to the US market is largely facilitated by the African Growth and Opportunity Act (AGOA), under which eligible exports enter the American market duty-free. Since AGOA’s enactment in 2000, it has had a profound impact on Kenya’s economy, particularly by spurring growth in the apparel sector. According to Kenya’s Ministry of Industrialisation, Trade and Enterprise Development, AGOA has supported the creation of over 58,000 direct jobs and approximately 100,000 indirect jobs within the country’s apparel industry alone.
However, the recent imposition of a 10% tariff by the United States government threatens to disrupt these gains. The move comes amid a broader trend of rising protectionism in global trade, as highlighted in a 2024 report by the World Trade Organization (WTO), which noted a marked increase in trade-restrictive measures among major economies.
KAM anticipates that the effects of the 10% tariff will be significant:
- Loss of Competitive Advantage: Kenyan exports, which previously enjoyed zero-duty access under AGOA, will now face additional costs. This threatens to erode Kenya’s competitive edge in a market where cost competitiveness is critical, particularly in the highly sensitive textile and apparel sectors.
- Potential Decline in Export Volumes: The additional tariff burden will likely reduce demand for Kenyan goods in the US market, potentially diminishing Kenya’s total exports, which reached US$737.3 million in 2024.
- Broader Economic Impact: A contraction in exports could have cascading effects on employment, foreign exchange earnings, and industrial growth, given the sector’s strong linkages to other parts of Kenya’s economy.
Trade experts, including those at the Brookings Institution’s Africa Growth Initiative, have warned that new tariff barriers could undermine the progress made by African countries under AGOA unless strategic adjustments are made. Brookings suggests that diversifying export products, investing in higher-value manufacturing, and seeking new markets could help buffer the impact.
KAM also sees potential opportunities arising from this challenge. It advocates for deepening trade and investment ties between Kenya and the United States beyond AGOA, including through bilateral trade agreements. Negotiations for a Kenya–US Free Trade Agreement (FTA), which began in 2020 but have progressed slowly, could gain renewed impetus as both nations seek to secure more stable and mutually beneficial trade arrangements.
In the meantime, KAM urges Kenyan exporters to improve efficiency, pursue product diversification, and explore emerging markets in Europe and Asia to mitigate the potential fallout from the US tariff hikes.
As global trade dynamics continue to evolve, Kenya’s ability to adapt swiftly and strategically will be crucial to sustaining its export-driven growth trajectory.
