Kenya faces new US tariffs after Trump announces new fight against ‘unfair trade’
The directive is expected to impact Kenya significantly, as it currently applies a 16 per cent VAT on goods entering its market.
Kenya faces higher tariffs on exports to the United States following President Donald Trump's latest directive targeting countries that impose value added tax (VAT) on imported goods.
Trump announced this through a statement on X where he divulged that his administration would explore ways of implementing reciprocal tariffs, arguing that VAT systems create an unfair trade environment for American goods.
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"On trade, I have decided, for purposes of fairness, that I will charge a reciprocal tariff, meaning whatever countries charge the United States of America, we will charge them, no more, no less!" stated Trump.
He further directed the Secretary of State, Secretary of Commerce, Secretary of the Treasury, and the United States Trade Representative (USTR) to take necessary steps to enforce this new trade approach.
"For purposes of this United States policy, we will consider countries that use the VAT System, which is far more punitive than a tariff, to be similar to that of a tariff. Sending merchandise, product, or anything by any other name through another country, for purposes of unfairly harming America, will not be accepted," said Trump.
The directive is expected to impact Kenya significantly, as it currently applies a 16 per cent VAT on goods entering its market. As such commodities from foreign countries are priced higher, forcing consumers to seek cheaper alternatives. This in turn reduces revenues for countries like The US.
"For many years, the US has been treated unfairly by other countries, both friend and foe. This system will immediately bring fairness and prosperity back into the previously complex and unfair system of trade," Trump said.
Kenya has also been a beneficiary of the African Growth and Opportunity Act (AGOA), exporting $6.5 billion (Sh840 billion) worth of garments and $577 million (Sh74.5 billion) worth of nuts to the US duty-free since its inception in 2000.
Consequently, the Kenyan market may be hit with reduced revenues and massive job cuts due to exorbitant costs of production if the sanctions are applied.
This, however, may not matter to Trump as he also added that his administration would make provision for subsidies provided by countries to take economic advantage of the United States.
"Likewise, provisions will be made for nonmonetary tariffs and trade barriers that some countries charge to keep our product out of their domain. If a country feels that the United States would be getting too high a Tariff, all they have to do is reduce or terminate their tariff against us," said Trump.
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