KAM Statement On the 10% Reciprocal Import Tariff to Kenya imposed by USA

4th April 2025, Nairobi: The Kenya Association of Manufacturers (KAM) acknowledges the recent tariff escalation by the United States of America (USA) and its potential impact on trade between Kenya and USA.  The USA remains one of Kenya’s top trading partners, with bilateral trade steadily growing over the years.

According to the United States International Trade Commission (USITC), Kenya’s 2024 exports to the USA stood at US$737.3 million, with apparel accounting for 72% (US$533 million). Other key exports included coffee, black tea, agro-produce, home décor, and crafts.

Meanwhile, Kenya imported goods worth US$782.5 million from the USA, primarily petroleum products, capital goods, aircraft & parts, machinery, and pharmaceuticals. This demonstrates a balanced trade relationship with the USA enjoying a trade surplus of US$45.2 million.

Under the African Growth and Opportunities Act (AGOA), Kenya continues to enjoy duty free (0%) market access to the United States. Over the years, AGOA has had a significant economic and social impact in Kenya, creating over 58,000 direct and approximately 100,000 indirect jobs within the apparel sector alone. On the other hand, American consumers and brands have enjoyed access to an alternative supply chain, addressing their key economic and social needs.

While tariffs are a commonly used trade policy tool, they have both positive and negative implications. The new 10% tariff adjustment by the USA presents challenges that could disrupt Kenya’s export market and affect trade dynamics while offering opportunities to scale up trade and investments between the United States and Kenya.

KAM views the likely impact of the 10% tariff to be as follows: –

1. Reduced Price Competitiveness – Kenya’s exports to the USA, previously duty-free under AGOA, will now be subject to additional costs, reducing their market competitiveness. This is expected to impact on Kenya’s total exports of US $737.3 million realized in 2024.
2. Impact on Existing Contracts – Contracts currently based on zero (0%) AGOA preferential treatment will be affected, potentially forcing Kenyan manufacturers to absorb extra costs.
3. Widening Trade Deficit – Kenya’s trade deficit with the USA, currently at US$45.2 million, may widen due to expected export reductions and loss of USA market share.

KAM Recommendations

To mitigate these impacts and sustain Kenya’s economic gains, KAM urges:

1. Continuous Bilateral Engagement between Kenya and USA on:
   – Extension of AGOA beyond its expiry in September 2025, ensuring continued benefits for Kenya, Africa, and the USA, through job creation, improved livelihoods industrial growth, and investment opportunities-
   – Review of the 10% tariff to maintain Kenya’s export price competitiveness in the USA market.
   – Provide for a transition clause for cargo currently enroute to USA that was shipped based on the 0% AGOA preference.

2. Enhancing Kenya’s Global Export Competitiveness. Strengthening Kenya’s position in global markets in line with the shifting global economic dynamics by addressing key factors such as cost of production and a conducive business environment.

KAM remains committed to supporting manufacturers exporting to USA through export advisory and trade facilitation support services. We will continue engaging with the Government of Kenya and key stakeholders to safeguard Kenya’s trade interests and competitiveness in the USA market.

Tobias Alando

Chief Executive