Chief executive officers (CEOs) in the tourism and manufacturing sectors expect to suffer the biggest hit from US President Donald Trump’s protectionist trade policies and the non-renewal of preferential terms under the African Growth and Opportunity Act (Agoa), a new Central Bank of Kenya (CBK) survey has revealed.
The survey, which sampled the views from over 1,000 private sector CEOs, shows that overall, about two-thirds (64 percent) of the respondents expect to be negatively impacted by the recently raised US trade tariff on Kenyan goods and the expiry of the Agoa, which provides duty-free access to the US for thousands of products from 32 eligible African countries.
“Most respondents anticipate being affected by the recent US trade tariffs and policy changes through higher import costs for inputs and finished goods and reduced exports to the US after the expiry of Agoa,” the CBK survey said.
“They also expect lower consumer demand due to reduced disposable incomes from declining profits and job losses, as well as secondary effects on local businesses reliant on affected clients. For instance, the hotel industry reported reduced business, with fewer conference bookings,” it added.
President Trump, on April 2, imposed a 10 percent tariff on imports from some African nations, including Kenya. Mr Trump invoked the International Emergency Economic Powers Act to impose a baseline tariff on all US trading partners in a bid to address what he termed as ‘absence of reciprocity in our bilateral trade relationships’.
Kenya is also among African countries set to be hardest hit by non-renewal of the Agoa deal, with projections by the UN Conference on Trade and Development indicating that the country’s average weighted trade tariff with the US, will nearly triple to 28 percent on expiry of the preferential trade deal, signaling a major blow to jobs and investments in the country’s textile and apparel sector.
More than half of Kenyan exports to the US comprises clothing, macadamia, coffee, titanium ores and concentrates, and black tea. Three-quarters of US-bound exports benefit from duty-free access to the US under the Agoa policy, while some 300,000 jobs in Kenya are tied to the arrangement.
Kenya’s textile and apparel industry is one of the biggest Agoa beneficiaries, earning a record Sh60.57 billion from textile exports to the US in 2024 — a growth of 19.20 percent over Sh50.82 billion in the prior year.
The CBK survey highlights that a third of CEOs in the tourism sector are worried that the Trump administration’s tariffs imposed on Kenya and other countries and the end of the Agoa trade agreement will result in fewer bookings and earnings.
The sector is one of the many that have benefited from the presence of donor programmes such as the US Agency for International Development through bookings for meetings, incentives, conferences and exhibitions, among others.
“The tourism sector prospects improved, supported by expectations of intensified activity during the upcoming festive season, increased marketing initiatives and political stability, though activity has been dampened by reduced NGO funding - mainly through lower conferencing demand - and transitional challenges related to the Government E-procurement policy,” said CBK.
CEOs from the manufacturing sector reported continued constraints such as liquidity challenges from pending bills, limited access to financing, weak consumer demand, and competition from global manufacturers, but were optimistic about turning this around in the festive season.
A fifth (22.4 percent) of manufacturing CEOs expressed concerns about trade tariffs and policy changes affecting their businesses negatively.
About an eighth (12.2 percent) of executives from the financial services industry, which involves the investment, lending and management of money and assets, say the tariffs and end of Agoa will impact their businesses negatively.
