Kenya is optimistic about a potential trade advantage as U.S. tariffs on competitors rise, but challenges lie ahead. With imports from Kenya facing a minimal 10% tariff compared to 46% for Vietnam, 44% for Sri Lanka, and 37% for Bangladesh, the East African nation hopes to attract buyers looking for alternatives in textile manufacturing.
“Kenya could position itself as a sourcing hub for buyers,” said Trade Minister Lee Kinyanjui, highlighting the tariff disparity as a potential boost for the country. While Kenya’s textile sector may gain, economists caution that broader global recession risks could offset any advantages.
J.P. Morgan raised its global recession forecast to 60% due to U.S.-China trade tensions, which may dampen overall trade. The risks are compounded by Kenya’s high business costs, including steep electricity prices and taxes, which increase expenses by 20% compared to global competitors.
Manufacturers like Pankaj Bedi of United Aryan Ltd., which supplies U.S. retailers, question the long-term competitiveness of Kenya’s manufacturing sector. “A temporary tariff disparity does not create real competitiveness,” Bedi said.
Additionally, the potential expiration of the African Growth and Opportunity Act (AGOA) in September could undermine Kenya’s tariff advantages. The U.S. trade initiative, which allows duty-free exports, is set to expire, casting a shadow over Kenya’s prospects.
While some manufacturers remain optimistic, such as Jaswinder Bedi, who plans to expand his workforce, the country’s future trade success will depend on negotiations with Washington.