US Slaps 10% Tax on Kenyan Exports in Retaliation to 16% VAT on American Goods
The United States has imposed a 10% tariff on Kenyan exports in response to Kenya’s 16% value-added tax (VAT) on American goods, escalating trade tensions between the two nations. This move, initiated by the Trump administration, is expected to severely impact key Kenyan exports, including agricultural products, textiles, tea, and coffee—sectors that have long benefited from the African Growth and Opportunity Act (AGOA).
The U.S. government has labeled Kenya’s 16% VAT on American imports as an unfair trade barrier, prompting a retaliatory move. A statement from the White House underscored Washington’s stance:
“The United States will not stand by as American businesses face unfair taxation abroad. Kenya must reconsider its 16% VAT on U.S. products if it wants continued preferential access to our market.”
According to U.S. officials, the VAT system makes American exports more expensive in Kenya, creating an uneven playing field. In contrast, Kenyan goods entering the U.S. market have enjoyed tax-free privileges under AGOA.
Former U.S. President Donald Trump defended the decision, arguing that VAT systems globally, including Kenya’s, disadvantage American exporters.
“Today we are standing up for the American worker and we are finally putting America first. This is one of the most important days, in my opinion, in American history.”
The new 10% baseline tariff is set to affect Kenyan exports worth approximately Ksh109.7 billion (USD 784 million) annually. Additionally, pharmaceutical products—one of Kenya’s key exports to the U.S., valued at Ksh22 billion (USD 157 million)—will also be affected.
Kenya’s export sector faces a major setback, with potential job losses and reduced revenue for businesses reliant on the American market. The country also imports Ksh113.03 billion (USD 807.35 million) worth of goods from the U.S., including mineral fuels, machinery, aircraft parts, and cereals, which may see price fluctuations due to the ongoing trade dispute.
The tariffs have sparked concerns across Africa, with countries like Tanzania, Uganda, Lesotho, Madagascar, Mauritius, Botswana, Angola, Libya, South Africa, Egypt, Morocco, Ethiopia, and Ghana also facing similar trade penalties.
The U.S. has hinted that the tariffs will remain in place unless Kenya renegotiates its VAT policy. Whether Kenya will bow to pressure or seek alternative markets remains to be seen. Meanwhile, the trade war between the two countries threatens to strain their long-standing economic ties, forcing policymakers to reconsider their strategies.
With Washington determined to protect its trade interests, Kenya’s exporters may have to brace for tougher times ahead unless diplomatic negotiations lead to a favorable resolution.
