Trade Lifeline in Limbo

NAIROBI – A much-anticipated zero-tariff trade agreement with China, viewed by Kenyan exporters as a critical buffer against the loss of duty-free access to the United States, has stalled, creating significant uncertainty for key sectors of the nation's economy. The delay comes at a precarious time, following the official expiration of the African Growth and Opportunity Act (AGOA) on Tuesday, 30 September 2025, a 25-year-old pact that was the bedrock of Kenya's textile and apparel exports to the US.

The AGOA agreement had granted more than 30 sub-Saharan African countries, including Kenya, duty-free access to the American market for thousands of products, fostering significant industrial growth. Its expiry now exposes Kenyan goods, particularly apparel, to tariffs of up to 28%, severely undermining the cost advantage that allowed local factories to compete with Asian manufacturing giants. The Kenya Association of Manufacturers (KAM) has warned that without a replacement or extension, over 60,000 direct jobs and another 100,000 indirect jobs are at risk. United Aryan EPZ Limited, a major apparel exporter, has already announced plans to cut 1,000 jobs.

A Strategic Pivot to the East

In anticipation of AGOA's expiration, the Kenyan government has been pursuing a strategic pivot towards Asia, with a reciprocal zero-tariff deal with China as the centerpiece. President William Ruto announced in August 2025 that Beijing had agreed in principle to remove all tariffs on Kenyan tea, coffee, avocados, and other agricultural exports. The deal was expected to be finalized within months, opening up China's vast consumer market of 1.4 billion people.

This move was seen as a direct response to the deteriorating trade relationship with the US, which had imposed a 10% tariff on Kenyan goods even before AGOA's final lapse. On Tuesday, 1 October 2025, Chinese Ambassador to Kenya, Guo Haiyan, publicly vowed to speed up the implementation of the zero-tariff pact, stating that China would work with Kenya to ensure it “takes effect at an early date.” However, despite these high-level assurances, the finalization of the bilateral instruments has slowed, causing alarm among local traders who had banked on the agreement to offset losses in the American market.

Economic Ramifications and Geopolitical Pressures

The stakes are immense. In 2024, Kenya's apparel exports to the US under AGOA were valued at approximately $600 million. The textile and apparel sector directly employs over 66,000 Kenyans, according to the Kenya National Bureau of Statistics (KNBS). The Kenya Association of Manufacturers (KAM) has been a vocal proponent of securing new markets, highlighting the severe impact the loss of preferential access will have on export earnings and industrial growth.

The trade imbalance between Kenya and China remains a significant concern. In 2023, Kenya's imports from China were valued at approximately Sh459 billion ($4.66B), while its exports to the Asian giant stood at only Sh29 billion ($290M). Some analysts fear a comprehensive Free Trade Agreement (FTA) could exacerbate this deficit by allowing cheaper Chinese manufactured goods to flood the local market, a reason Kenya had previously resisted a broader EAC-China FTA. The current proposed deal focuses more narrowly on agricultural exports, which Nairobi hopes will begin to correct the imbalance.

Kenya's trade policy is navigating a complex geopolitical landscape, caught between its traditional Western partners and the growing influence of China. While the US remains a critical market, negotiations for a post-AGOA framework, the Strategic Trade and Investment Partnership (STIP), have not yet produced a replacement agreement covering tariffs. This has pushed Kenya to deepen its ties with Beijing, a key partner in major infrastructure projects under the Belt and Road Initiative (BRI), such as the Standard Gauge Railway (SGR).

An Uncertain Path Forward

As of Tuesday, 18 November 2025, Kenyan exporters remain in a precarious position. The government is still expressing optimism for a last-minute, short-term extension of AGOA from Washington, even as it diversifies its economic partnerships. Cabinet Secretary for Investments, Trade and Industry, Lee Kinyanjui, has urged businesses to focus on building more resilient frameworks through Special Economic Zones and attracting investment in new sectors.

However, for the thousands of workers in Kenya's Export Processing Zones, the immediate future hinges on whether the government can successfully conclude the stalled negotiations with Beijing. The delay underscores the vulnerability of relying on preferential trade agreements and highlights the urgent need for Kenya to enhance its domestic competitiveness and strengthen regional trade blocs like the East African Community (EAC) and the African Continental Free Trade Area (AfCFTA). Until the ink is dry on the China deal, a cloud of uncertainty will hang over a vital pillar of the Kenyan economy.