How Trump's chaos will ripple through Kenyan economy

US President Donald Trump holds a chart as he delivers remarks on reciprocal tariffs during an event in the Rose Garden entitled "Make America Wealthy Again" at the White House in Washington, DC, on April 2, 2025.  [AFP]

As the world grapples with global economic shockwaves and geopolitical tensions, US President Donald Trump’s administration has roiled the waters for both allies and foes.

Considering America’s status as a global superpower, even Trump’s smallest policy decisions have far-reaching repercussions worldwide.

Barely six months into his second term as the 47th US President, Trump’s “America First” mantra has drawn global criticism.

Travel Restrictions

On June 4, 2025, President Trump signed a proclamation  imposing a travel ban on nationals from 12 countries and partial restrictions on seven others, effective June 9, 2025, citing national security concerns.

The move was due to what Trump claimed was the inadequate capacity of these countries to identify potential safety or terrorism threats to the US.

Those whose nationals have been locked out of the US altogether are Afghanistan, Myanmar, Chad, the Democratic Republic of Congo, Equatorial Guinea, Eritrea, Haiti, Iran, Libya, Somalia, Sudan, and Yemen.

Partial restrictions,  limiting visa categories such as immigrant, tourist, and student visas, apply to Burundi, Cuba, Laos, Sierra Leone, Togo, Turkmenistan, and Venezuela.

Trump said in a White House broadcast that on his first day in office, he directed the Secretary of State to review “high-risk regions” and recommend travel restrictions.

Critics argue the ban is discriminatory based on ethnicity or religion and lacks consistent criteria, noting that countries like Spain, with higher visa overstay rates, were excluded.

The African Union (AU) and US lawmakers, including Senators Markey and Schiff, have condemned the ban, highlighting its potential to strain diplomatic relations and disrupt families, particularly in Afghanistan and Haiti.

“The Commission remains concerned about the potential negative impact of such measures on people-to-people ties, educational exchanges, commercial engagement, and the broader diplomatic relations nurtured over decades,” the AU Commission stated, urging a balanced, evidence-based approach that respects US-Africa partnerships.

The ban, already prompting retaliation from countries like Chad, will subject Kenyan travellers to increased scrutiny due to Kenya’s proximity to Somalia and Sudan.

Kenya hosts significant refugee populations from these countries, and the ban may complicate its role as a regional humanitarian hub.

If American resettlement programmes for refugees from banned countries are curtailed, Kenya could also face increased pressure to manage refugee populations locally, straining resources.

Trump’s first term saw reductions in foreign aid and withdrawal from global climate agreements like the Paris Accord.

A similar approach could cut US support for African climate adaptation or health programmes, affecting Kenya’s efforts in drought resilience and Hiv/Aids management.

Potential renegotiations of trade agreements like the African Growth and Opportunity Act (Agoa) could disrupt African exports, including Kenya’s textile industry, which employs over 200,000 people.

Trump-Elon tensions

The relationship between Donald Trump and Tesla CEO Elon Musk, once marked by close collaboration, has deteriorated, descending into a recent public feud.

Tensions emerged over policy disagreements, particularly Trump’s “One Big Beautiful Bill,” a multi-trillion-dollar tax and spending package, with Musk criticising it as a “disgusting abomination.”

While the feud itself is a US-centric drama, its consequences for Kenya are tangible, particularly through the loss of US-funded programmes and potential disruptions to digital and economic initiatives.

The fallout has specific implications for Kenya, primarily tied to Musk’s actions through the Department of Government Efficiency (DOGE) and broader US policy shifts under Trump’s administration.

Musk’s DOGE initiative, aimed at slashing US Federal spending, led to the cancellation of several US-funded contracts in Kenya deemed “wasteful.”

This included a $10 billion (Sh1.2 trillion) primary literacy programme, which was a significant investment in Kenya’s education sector and another $439 million (Sh56.7 trillion) consulting contract for aviation advisors, affecting Kenya and neighbouring countries.

These cancellations have disrupted funding for education and infrastructure, potentially stunting development projects and straining Kenya’s capacity to fill these financial gaps.

Kenya’s digital health system, which relied heavily on America’s support for patient records, facility lists, vaccine data, and disease surveillance, was impacted by Trump’s executive order pulling US funding.

Trump Tariffs

On April 9, Trump imposed a 10 per cent across-the-board tariff on all imports, plus higher reciprocal rates for countries with which the US has large trade deficits. He later paused or lowered those but kept the 10 per cent baseline tariff in place.

The Court of International Trade in New York ruled recently that Trump’s reciprocal tariffs are illegal, finding that the president overstepped his authority by imposing the import levies last month.

Experts say that this ruling could throw Trump’s sweeping trade policies into disarray,

The ruling, if it stands, would blow a hole through Trump’s strategy to use tariffs to wring concessions from trading partners, experts say. It also creates uncertainty around trade negotiations and agreements with the European Union and China, as well as other countries

The move to impose reciprocal tariffs on nations exporting to the US has sent shockwaves across global economies.

In the hours following the announcement of the tariffs, which was made after markets closed in the US, the reactions were swift and continued to be felt right across the world.

Experts aver that with a risk of increased inflation in the US, reduced incomes, reduced disposable income, a possible recession in the offing and a simple increase in price of consumer products, the negative impact of the taxation measures will make its way through the rest of the global economy and eventually come to percolate at home here in Kenya.

The announcement by Trump on far broader and bigger tariffs, directly targets about 60 countries, including massive tariffs on China and its largest trading partners.

In Japan, one of US’ top trading partners, Prime Minister Shigeru Ishiba said the tariffs had created a “national crisis” as a plunge in banking shares set Tokyo’s stock market on course for its worst week in years, Investment bank JP Morgan said it now sees a 60 per cent chance of the global economy entering recession by year end, up from 40 per cent previously.

China vowed retaliation for Trump’s 54 per cent tariffs on imports from the world’s No. 2 economy, as did the European Union, which faces a 20 per cent duty.

But closer home, there are concerns about taxes imposed on countries that import, value-add add and then re-export products that originate in Kenya.

Of particular concern is Switzerland, after the announcement that Swiss goods will be subject to 31 per cent to 32 per cent when imported into the US.

In 2023, Switzerland was the second-largest exporter of Coffee in the world, with a total export value of $3.69 billion.

Switzerland is a significant coffee exporter to the US, particularly of roasted and ground coffee, and in 2023, it was the third-largest coffee exporter to the US, after Brazil and Colombia, with exports valued at $1.13 billion (Sh145.7 billion).

While Switzerland doesn’t grow its own coffee, it has a thriving roasting industry and imports a lot of raw, dry coffee.

According to the Global Observatory of Economic Complexity, Switzerland is a major importer of Kenyan coffee, with exports of coffee to Switzerland reaching $30.5 million (Sh3.9 billion) in 2023.

These tariffs could reduce demand for Kenyan coffee, threatening livelihoods.