Kenya will experience higher tariffs on exports to the U.S. following Trump’s announcement of reciprocal tariffs aimed at countries with VAT systems. This new approach could disrupt Kenya’s economy, leading to job losses and reduced revenues, especially given its reliance on duty-free exports under AGOA.
Kenya faces increased tariffs on exports to the United States, following President Trump’s announcement of a new trade strategy against countries that impose a Value Added Tax (VAT) on imported goods. Trump revealed that his administration will seek to implement reciprocal tariffs, which means the U.S. will impose similar tariffs on countries based on their charges to American goods.
In a statement made on X, Trump argued that VAT systems create an unbalanced trade scenario for U.S. products. He instructed key officials, including Secretary of State and the U.S. Trade Representative, to take necessary actions to enforce this new tariff framework.
Trump described the VAT as being more punitive than traditional tariffs, affirming that any country that uses such a system will be treated as if they are imposing tariffs. He stated, “Sending merchandise… to unfairly harm America will not be accepted.”
Kenya’s economic situation could be adversely affected by this directive, as the country currently has a 16% VAT on imported goods. This tax raises prices for consumers and may lead to reduced demand for U.S. products, thereby impacting American revenues as well.
Trump emphasized that the U.S. has faced unfair trade practices for years and declared that his new system aims to restore fairness. He illustrated this point by discussing how countries that utilize VAT will face equivalent U.S. tariffs.
Kenya has historically benefited from the African Growth and Opportunity Act (AGOA), exporting $6.5 billion in garments and $577 million in nuts to the U.S. duty-free since its establishment in 2000. If these tariffs take effect, Kenya may struggle with reduced income and significant job losses due to increased production costs.
Trump reiterated his stance on tariffs, stating that provisions would also be made for nonmonetary tariffs and trade barriers created by various countries. He maintained that countries could avoid high tariffs by reducing their own tariffs against U.S. goods: “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.”
In conclusion, Kenya’s economy stands to face significant challenges with the implementation of new U.S. tariffs as directed by President Trump. The increased tariffs could lead to price hikes and reduced demand for Kenyan exports, ultimately affecting employment and revenue. Trump’s rationale centers around creating fair trade practices, yet the potential consequences for Kenya are severe, particularly regarding its established trade benefits under AGOA.
Original Source: eastleighvoice.co.ke
