CEOs Brace for Impact of US Trade Policies

Kenyan chief executive officers (CEOs) in the trade and tourism sectors are anticipating the lowest growth in the coming year, according to a Central Bank of Kenya (CBK) survey conducted in September 2025. This cautious outlook is largely attributed to the recently imposed US trade tariffs on Kenyan goods and the impending expiry of the African Growth and Opportunity Act (AGOA), which has historically provided duty-free access for thousands of Kenyan products to the US market.

The survey, which gathered insights from over 1,000 private sector CEOs, indicates that approximately two-thirds (64 percent) of respondents expect negative repercussions from these US policy shifts. These impacts are projected to manifest as higher import costs for raw materials and finished goods, coupled with reduced exports to the US once AGOA concludes.

Tourism Sector Faces Reduced Bookings and Earnings

The tourism, hotels, and restaurants sector is particularly vulnerable, with 32.7 percent of CEOs reporting anticipated negative consequences. Concerns include fewer bookings and diminished earnings, exacerbated by factors such as reduced funding from Non-Governmental Organisations (NGOs) and a decline in conference demand. The US has historically been a top source market for international visitors to Kenya.

Despite these concerns, the Kenya Tourism Board (KTB) had a positive outlook for 2025, projecting 3 million international arrivals and KSh 560 billion in earnings, building on a strong performance in 2024 where the sector recorded 2.4 million arrivals and KSh 452.20 billion in earnings. This growth in 2024 represented a 19.79 percent increase in earnings from the previous year. However, the recent CBK survey highlights a potential shift in sentiment among tourism sector leaders.

Trade Sector Braces for Higher Tariffs

The manufacturing sector also faces significant challenges, with 22.4 percent of CEOs citing higher costs and reduced export opportunities as key concerns. Kenya's textile and apparel industry, a major beneficiary of AGOA, earned a record KSh 60.57 billion from textile exports to the US in 2024. The non-renewal of AGOA could see Kenya's average weighted trade tariff with the US nearly triple to 28 percent, posing a substantial threat to jobs and investments in this sector.

In 2024, Kenya's merchandise trade volume increased to approximately USD 28.18 billion, with export earnings growing to around USD 8.16 billion. However, the volume of trade saw a decline from KSh 333.8 billion in February 2024 to KSh 306.2 billion in March 2024.

Broader Economic Context and CEO Sentiment

Overall, Kenyan firms are grappling with high operational costs, rising taxes, and limited access to credit. The proportion of CEOs identifying the cost of doing business as a major constraint rose to 22 percent in September 2025, up from 20 percent in July. Concerns over taxation also increased sharply, from 15 percent to 19 percent. Limited access to credit nearly doubled as a concern, from seven to 12 percent.

Despite these headwinds, the CBK noted an improved overall optimism about Kenya's economy, buoyed by stable macroeconomic indicators, favourable weather, a growing digital economy, and easing lending rates. The International Monetary Fund (IMF) projects Kenya's real GDP growth at 5.0 percent in both 2025 and 2026, driven by a robust agricultural sector and rising exports. However, the World Bank has trimmed its forecast for Kenya's economic growth in 2025 from 5.0 percent to 4.5 percent, citing heavy government borrowing and elevated lending rates.

Unanswered Questions and Future Outlook

The full extent of the impact of the new US trade tariffs and the eventual expiry of AGOA on Kenya's economy remains to be seen. While some sectors, like agriculture, manufacturing, and construction, have shown growth, the wholesale & retail and services firms have recorded declines. The government's strategies to mitigate the adverse effects on trade and tourism will be crucial in shaping the economic trajectory for these vital sectors.

What specific measures will the Kenyan government implement to diversify export markets and cushion businesses from the impact of US trade policy changes? How will the tourism sector adapt its marketing strategies to maintain growth amidst these challenges? These questions remain central to the outlook for trade and tourism in Kenya.

What to Watch

Stakeholders will be closely monitoring government interventions and policy adjustments aimed at supporting the affected sectors. The performance of key economic indicators, particularly in trade and tourism, will provide further insights into the resilience of the Kenyan economy in the face of evolving global trade dynamics.