During the first half of President Donald Trump’s second term, familiar themes of his 'America First' policy have continued to dominate the administration’s agenda. Following the expiry of the initial 90-day suspension of tariffs on July 9, 2025, and a subsequent extension to August 1, 2025, President Trump has issued a new Executive Order revising the reciprocal tariff rates. On July 31,he imposed additional ad valorem duties on the goods of certain trading partners, substituting the additional duties previously imposed. Trump further announced that his administration will maintain a flat 10 percent tariff on all goods imported into the US, ostensibly to protect American producers and reduce reliance on foreign markets. Although Kenya is subject to the lowest tariff rate of 10 percent, the imposition of this rate is already having a significant impact on the local economy. Uncertain timesKenya exports agricultural products, textiles and manufactured goods to the US, all of which are affected by President Trump’s tariffs. The US policy on trade threatens years of duty-free and quota-free access to the US market for Kenyan products under the African Growth and Opportunity Act (Agoa).Agoa’s future was already in doubt given its September 2025 expiry. Trump’s 10 percent tariff adds fuel to an already smouldering fire. The Kenya National Bureau of Statistics (KNBS) Economic Survey 2025 shows that Kenya’s exports to the US under Agoa were valued approximately Sh60.6 billion in 2024, up from Sh50.8 billion in 2023. The same report states that employment in Agoa-accredited export firms rose to 66,804 in 2024, a 15.18 percent yearon-year increase from the previous year. In alignment with the report, the World Bank and ICE Italian Trade Agency note that over 70 percent of Kenyan textile and apparel exports are to the US market, supporting 75,598 workers in Export Processing Zones.These jobs are therefore at peril under Trump-era tariffs. Speaking to The East African, Dr Juma Mukhwana, Principal Secretary (PS) for the State Department of Industry in the Ministry of Investments, Trade and Industry, noted that measures announced by President Trump will have wide-ranging implications for Kenya’s economy. He remarked that Agoa has historically provided duty-free access for over 6,000 Kenyan products and exports from 32 sub-Saharan African countries to the US market. By overriding Agoa’s benefits, Kenya’s trade advantage could be significantly eroded. Uncertainty surrounding Agoa’s future adds further complexity to the trade environment.Knock-on effectThe 10 percent import duty imposed by the US destabilises the textile and apparel industry, throwing the impacted sectors into economic anguish with a knock-on effect on the rest of the economy.The tariffs are already impacting export-driven sectors that support jobs and incomes, triggering a chain reaction- dampening exports, widening the trade deficit, and reducing dollar inflows. A decreased dollar inflow could exert pressure on the Kenyan shilling. According to the PS Mukhwana, Trump’s move gives Kenya an opportunity to reconsider used clothing imports, re-strategise to sustain its US apparel market, and boost trade within the East African Community (EAC), while also reviewing its overall industrial performance, without appearing to be seen as being retaliatory. While the PS takes comfort in the fact that the tariff remains relatively low, thus preserving Kenya’s competitiveness, particularly in textiles against major exporters like Bangladesh, he cautions that adapting to these changes will require time, during which other disruptive developments may emerge.The way forward?Given the current trade environment, Kenya may need to intensify diplomatic engagement with the Trump administration, including building coalitions with US businesses that have benefitted from Kenyan imports under Agoa to lobby Congress for its extension.This approach could also open avenues to seek exemptions or mitigations for key Kenyan exports as new tariffs are enforced. Such efforts should be framed constructively to avoid perceptions of retaliation and may be complemented by advancing negotiations under the Strategic Trade and Investment Partnership. Regionally, Kenya must strengthen intra-African trade under the African Continental Free Trade Area (AfCFTA), not as a replacement of the US market, but as part of its strategic diversification of export destinations.  (ICE NAIROBI)

Fonte notizia: Business Daily