Kenya Pushes Strategic Trade Talks with U.S. as AGOA Expiry Nears

Kenya has stepped up efforts to strengthen its trade and investment relations with the United States, as a high-level delegation from the Ministry of Investments, Trade and Industry commenced a three-day working tour in Washington D.C. The delegation is led by Cabinet Secretary Lee Kinyanjui and Principal Secretary for Trade Regina Ombam, with the mission focused on advancing strategic engagements that safeguard Kenya’s long-term trade interests and open fresh opportunities for exporters.

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High-Stakes Negotiations Amid Tariff Pressures

According to a press statement from the Ministry, the program includes meetings with senior U.S. trade officials and direct engagements with the American private sector through the U.S. Chamber of Commerce. The talks come at a crucial moment as the African Growth and Opportunity Act (AGOA) approaches its expiry, with Kenya keen to ensure continuity for its exporters while addressing tariff measures affecting a broader range of products.

The urgency of these discussions has been amplified by President Donald Trump’s recent imposition of a 10 percent reciprocal tariff on Kenyan exports to America, announced on April 2, 2025. This baseline tariff, part of Trump’s sweeping trade policy overhaul dubbed “Liberation Day,” affects Kenya’s total goods trade with the world’s largest economy, which stood at $1.5 billion in 2024.

“Interest from U.S. companies in Kenya continues to grow, reflecting confidence in Kenya’s economy as a strategic gateway to Africa,” noted CS Kinyanjui. The Cabinet Secretary has emphasized that Kenya is actively negotiating with the United States to appeal the 10 percent trade tariff, stating that the government has “drafted the rationale” for this appeal.

AGOA’s Critical Role in Kenya’s Economy

Kenya and the United States share longstanding relations anchored on mutual benefit. Officials say the visit will not only deepen these ties but also create new pathways for business and investment, particularly in sectors critical to Kenya’s export growth.

The African Growth and Opportunity Act has been a cornerstone of Kenya-U.S. trade relations since 2000, providing eligible sub-Saharan African countries with duty-free access to the U.S. market for over 1,800 products. For Kenya, AGOA has been particularly transformative in the textile and apparel sector, which accounts for over 94 percent of total exports under the program.

Recent data from the Kenya National Bureau of Statistics Economic Survey 2025 reveals the substantial growth in Kenya’s AGOA exports. Apparel exported to the United States under AGOA earned Kenya KSh 60.6 billion ($470 million) in 2024, representing a significant 19.2% jump from KSh 50.8 billion in 2023. The volume of apparel exported to the U.S. market under the duty-free program increased from 97.3 million pieces in 2023 to 116.0 million pieces in 2024.

Employment and Economic Impact

The importance of AGOA extends far beyond trade figures—it’s a critical source of employment for thousands of Kenyan workers. Kenya’s Export Processing Zones (EPZ), which house the majority of textile and apparel manufacturing facilities, currently employ 75,598 workers according to Principal Secretary Dr. Juma Mukhwana. The textile and apparel sector creates 85% of jobs in these zones, making it the backbone of Kenya’s export-oriented manufacturing sector.

Kenya stands as the second-largest exporter of textile and apparel products to the U.S. among AGOA-eligible countries, accounting for 23.2 percent of the market. The sector generates monthly exports worth approximately Sh4.5 billion, or Sh150 million per day, demonstrating its critical role in Kenya’s foreign exchange earnings.

However, this success story faces significant threats. Workers at Kenya’s Export Processing Zones are facing potential job losses due to the Trump tariffs, which could override AGOA benefits. Dr. Mukhwana conceded that the measures announced by the U.S. leader could have wide-ranging implications for Kenya’s economy, stating: “If the tariffs override the AGOA benefits, it could reduce Kenya’s trade advantage.”

Strategic Trade and Investment Partnership (STIP)

Beyond AGOA, Kenya and the United States have been engaged in negotiations under the Strategic Trade and Investment Partnership (STIP) since July 2022. This partnership was launched by the Biden administration to replace the formal Free Trade Agreement negotiations that were initiated by the Trump administration in 2020 but discontinued.

STIP aims to establish “high-standard commitments” between the United States and Kenya on various non-tariff trade issues. The negotiations have progressed through multiple rounds, with officials from both countries racing to finalize an agreement before AGOA’s expiration in September 2025.

The partnership discussions cover several key areas including:

• Transparent and competitive procurement in Kenya’s public sector
• Effective protection of intellectual property rights
• Favorable sanitary and phytosanitary measures
• Workers’ rights and protections
• Good regulatory practices
• Agricultural market access

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Presidential Diplomacy and High-Level Engagement

The importance of these trade talks has been underscored by engagement at the highest levels of government. President William Ruto recently held a telephone conversation with U.S. Secretary of State Marco Rubio on Tuesday, August 19, 2025, discussing bilateral cooperation for the long-term benefits of both countries’ economies.

In his social media post, President Ruto emphasized: “At the bilateral level, we underscored the importance of strengthening Kenya–U.S. relations and agreed to deepen cooperation for the long-term benefit of our people and nations.”

This diplomatic engagement builds on President Ruto’s state visit to Washington in May 2024, which marked the first African state visit to the U.S. in over 15 years. The visit was significant in demonstrating Kenya’s strategic importance to the United States and its role as a gateway to Africa.

Economic Challenges and Opportunities

The current trade negotiations take place against a complex economic backdrop. Kenya exported goods worth $737.3 million to the U.S. in 2024, down 17.5 percent from 2023, while imports from the U.S. reached $782.5 million, up 61.4 percent. This has resulted in a U.S. goods trade surplus with Kenya of $45.2 million in 2024.

The 10 percent baseline tariff imposed by the Trump administration represents a significant shift from the preferential treatment Kenya has enjoyed. Previously, Kenya’s exports to the U.S. faced an average tariff of just 0.3 percent, largely due to AGOA benefits. The new tariff rate increases duties on Kenyan exports by more than 30-fold, potentially affecting the competitiveness of Kenyan products in the American market.

However, Kenyan officials see some opportunities in the changing landscape. Cabinet Secretary Kinyanjui noted that the 10 percent tariff for Kenya allows the country to remain competitive, especially in the textile sector, as other textile exporting giants such as Bangladesh have been hit with higher tariffs.

Diversification Beyond Textiles

While textiles and apparel dominate Kenya’s AGOA exports, there have been ongoing efforts to diversify the product range. Kenya’s national AGOA strategy has urged expansion beyond the approximately 30 apparel product lines that currently dominate U.S. exports.

Kenya exports other products to the U.S. including:

• Tea and coffee
• Macadamia nuts and edible oils
• Cut flowers and fresh produce
• Pharmaceutical products
• Minerals and raw materials

Despite these efforts, textile and apparel products continue to represent the vast majority of Kenya’s AGOA trade, highlighting both the success of this sector and the challenge of diversification.

Regional and Global Context

Kenya’s trade challenges with the U.S. reflect broader shifts in global trade dynamics. The Trump administration’s tariff policies have affected numerous African countries, with some facing even higher rates than Kenya. For example, South Africa faces a 30 percent export tax, while Lesotho—which depends heavily on textile exports—has been hit with a 50 percent reciprocal tariff.

The uncertainty surrounding AGOA’s renewal affects not just Kenya but the entire sub-Saharan African region. Thirty-two countries are currently eligible for AGOA benefits in 2024, and the program has been credited with creating hundreds of thousands of jobs across the continent.

Future Prospects and Strategic Positioning

As Kenya continues its Washington talks, several factors will influence the outcome. The country’s position as East Africa’s business, financial, and transportation hub makes it an attractive partner for the United States. Kenya’s status as “Africa’s Silicon Savanna” due to its burgeoning tech startup industry also presents opportunities for expanded cooperation beyond traditional trade.

The outcome of these talks is expected to shape the next phase of Kenya–U.S. economic cooperation, setting the stage for more resilient and diversified trade relations in the coming years. Success in these negotiations could provide a model for other African countries seeking to maintain and expand their trade relationships with the United States.

Officials emphasize that the discussions focus on securing Kenya’s long-term trade and investment interests, with particular attention to safeguarding Kenya’s exports beyond the expiry of AGOA and addressing tariff measures impacting the broader export portfolio.

Looking Ahead

The current Washington talks represent a critical juncture for Kenya-U.S. trade relations. With AGOA set to expire in just over a month and new tariff regimes taking effect, Kenya faces both challenges and opportunities in reshaping its trade relationship with its second-largest export destination.

The success of these negotiations will depend on several factors, including the ability to demonstrate mutual benefits, address U.S. concerns about trade reciprocity, and establish frameworks that can withstand future political changes in both countries.

For Kenya’s thousands of textile workers and hundreds of export-oriented companies, the stakes could not be higher. The outcome will determine whether Kenya can maintain its position as a competitive exporter to the U.S. market or whether the country will need to accelerate its pivot toward other global markets, including the European Union, China, and fellow African Continental Free Trade Area partners.

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By: Montel Kamau

Serrari Financial Analyst

20th August, 2025