Kenya faces increased trade imbalance with US amid new 10% export tariff - KAM

Kenya's trade relations with the United States face a new challenge following the introduction of a reciprocal 10 percent export tariff on Kenyan goods, manufacturers have said.

Through their umbrella body, the Kenya Association of Manufacturers (KAM), the manufacturers say the tariff could further exacerbate the country’s trade deficit with the US.

“Kenya’s trade deficit with the US, currently at $45.2 million (Sh5.8 billion), may widen due to expected export reductions and loss of US market share,” KAM said.

A trade deficit occurs when one country imports more goods and services than it exports, leading to a negative balance in trade.

Data from the office of the United States trade representative shows that the US total goods trade with Kenya stood at $1.5 billion (Sh193.9 billion) in 2024.

Notably, US goods exports to Kenya during the year stood at $782.5 million (Sh101 billion), up 61.4 percent from 2023.

Kenya’s key imports from the US include petroleum products, capital goods, aircraft & parts, machinery and pharmaceuticals.

On the other hand, US goods imports from Kenya in 2024 are valued at $737.3 million (Sh95.3 billion), down 17.5 percent from 2023.

During the year, apparel accounted for 72 percent (Sh68.9 billion) of the total exports from Kenya to the world's largest economy.

Other key exports to the US include coffee, black tea, agro-produce, home décor and crafts.

With the implementation of the new tariff, manufacturers have also expressed concerns about the reduced competitiveness of Kenya’s exports.

They reckon that the exports, previously duty-free under the African Growth and Opportunities Act (AGOA), will now be subject to additional costs, reducing their market competitiveness.

To mitigate these impacts and sustain Kenya’s economic gains, KAM recommends continuous bilateral engagements between the two states.

It adds that the extension of AGOA beyond its expiry in September 2025 would ensure continued benefits for Kenya, Africa and the US through job creation, improved livelihoods, industrial growth, and investment opportunities.

Nevertheless, it suggests revisiting the 10 percent tariff to ensure Kenya’s export price competitiveness in the US market is maintained.

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