Kenya sees a silver lining in the cloud of new U.S. tariffs, hoping to gain a competitive edge over Asian textile exporters now facing higher levies. While goods from Vietnam, Bangladesh, and Sri Lanka are subject to tariffs as high as 46%, Kenya will pay only a 10% rate, positioning it as a potentially attractive alternative sourcing hub for American buyers.
Trade Minister Lee Kinyanjui expressed cautious optimism, saying Kenya could benefit from this disparity. “With other textile-exporting countries facing much higher tariffs, Kenya could position itself as an alternative sourcing hub for buyers,” he noted.
However, this opportunity comes with significant challenges. Global recession fears are intensifying, with J.P. Morgan raising the probability of a worldwide downturn to 60%. A slowdown in key trading partners like the EU and China, who collectively accounted for over $1.5 billion of Kenya’s exports in 2023, could blunt any U.S.-related gains.
Moreover, domestic hurdles loom large. High electricity prices and taxation make Kenyan production up to 20% more expensive than competitors, according to Pankaj Bedi of United Aryan Ltd., a major garment exporter.
The expiration of the African Growth and Opportunity Act (AGOA) in September further complicates matters. AGOA has long enabled duty-free access to the U.S. for many Kenyan products, and its potential end threatens Kenya’s market competitiveness.
Still, some in the industry remain undeterred. Jaswinder Bedi, planning to expand his workforce to over 3,000, said the tariff gap with competitors has increased Kenya’s comparative advantage.
Much now hinges on the outcome of trade negotiations with Washington. As over 50 nations begin talks with the U.S., Kenya’s ability to secure favorable terms could determine whether it turns this global shakeup into a genuine economic opportunity.
