Kenya's trade with the US was dealt a blow on Wednesday after President Donald Trump signed a new executive order imposing reciprocal tariffs on trade with Kenya.
Under the new tariffs signed by Trump, Kenya's Ksh109.7 billion (784 million USD) trade with the US is set to suffer a blow after a 10 per cent baseline tariff on all of Kenya's exports.
The tariff will affect Kenyan exports, particularly in key sectors such as textiles, tea, and coffee, which have been exempt from tariffs under the African Growth and Opportunity Act (AGOA).
This, in turn, could lead to reduced exports, job losses, and lower revenues for businesses relying on the American market.
Announcing the signing of the new tariffs, Trump maintained that the purpose of imposing the tariffs was mainly to protect America's interests in trade with the countries affected.
Vaccines, blood, antisera, toxins, and cultures, which are part of pharmaceutical products that Kenya exports to the US, are also set to be affected by the new tariffs signed by Trump.
The value of trade exports that Kenya trades in pharmaceutical products stands at approximately Ksh22 billion (157 million USD).
The new order comes less than two months after Trump directed his government to impose fresh tariffs on countries that charge Value Added Tax (VAT) on US products.
Trump announced the decision in a post on X, instructing key government officials, including the Secretary of State, the Secretary of Commerce, the Secretary of the Treasury, and the United States Trade Representative (USTR), to explore ways of implementing the new tariffs.
According to Trump, the VAT system used by many countries, including Kenya, was unfair to American exports.
"Today we are standing up for the American worker and we are finally putting America first," Trump maintained, terming it "one of the most important days, in my opinion, in American history".
He argued that when goods from the US are sent to countries with VAT, they become more expensive due to the tax, making them less competitive in the market. In contrast, exports from those countries to the US often face fewer restrictions or taxes.
Kenya imports goods valued at approximately Ksh113.03 billion(807.35 million USD) that include mineral fuels and oils, machinery and mechanical appliances, aircraft and spacecraft parts, cereals among others.
Kenya currently charges a standard 16 per cent VAT on imported goods, including those from the US, making them more expensive for local consumers.
On the other hand, Kenyan exports to the US enjoy zero-rated VAT, making them cheaper in the American market. As a result, US exporters argued that they faced unfair competition, while Kenya enjoyed benefits from duty-free exports under programs such as the African Growth and Opportunity Act (AGOA).
Other countries in the region slapped with the tariff include Tanzania and Uganda, who were also slapped with the 10 per cent reciprocal tariff.
