Why CBK Isn’t Worried About Trump’s Tariff Hit on Kenya

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The Central Bank of Kenya (CBK) has downplayed the economic impact of the 10% tariff imposed by former U.S. President Donald Trump on Kenyan exports, projecting a potential loss of approximately $100 million (Sh12.94 billion) in export revenue.

Despite the seemingly significant figure, CBK Governor Kamau Thugge has labeled the impact as “immaterial” within the broader context of Kenya’s economy and balance of payments (BOP).

According to the CBK’s assessment, the tariff is expected to reduce Kenya’s exports to the U.S. due to higher prices making Kenyan goods less competitive in the American market. However, this decline represents a small fraction of the country’s overall trade performance.

In 2023, Kenya’s total exports stood at over Sh1 trillion, with exports to the U.S. contributing Sh64.2 billion, less than 10% of the total.

Furthermore, around 79.1% of these U.S.-bound exports, valued at approximately Sh50.8 billion, entered duty-free under the African Growth and Opportunity Act (AGOA), which supports exports of products such as apparel, macadamia nuts, coffee, and black tea.

Given this context, the $100 million loss primarily affects non-AGOA goods or reflects indirect effects such as reduced demand caused by increased prices.

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Governor Thugge emphasized that the anticipated decline is less than 1.2% of Kenya’s total exports and negligible in relation to the country’s GDP, which exceeds $122 billion.

He also pointed out that Kenya’s balance of payments, bolstered by remittances and strong foreign exchange reserves, can comfortably absorb such a minor shock.

The CBK’s confidence is also backed by Kenya’s diversified trade relationships. While the U.S. is a key market, it is not Kenya’s largest.

The European Union and regional partners in the East African Community account for a greater share of Kenya’s exports, reducing the country’s vulnerability to U.S.-centric trade policies.

Additionally, a 90-day pause on reciprocal tariffs for most nations, excluding China, offers a temporary window for negotiations and strategic adjustments.

Still, experts remain split on the long-term implications. While many agree with the CBK’s view that AGOA benefits and diversified markets provide a cushion, others warn that if tariffs persist or expand amid growing global trade tensions, Kenya could face broader challenges, especially around supply chains, investor confidence, and export competitiveness.

Jefferson Wachira is a writer at Africa Digest News, specializing in banking and finance trends, and their impact on African economies.