A New Protectionist Wave

United States President Donald Trump has proposed distributing a dividend of at least $2,000 to most American citizens, funded by revenues from steep tariffs imposed on imported goods. The announcement, made via his Truth Social platform on Sunday, November 9, 2025, has ignited a fierce debate within the U.S. and sent ripples of concern across the global trade landscape, including in key partner nations like Kenya.

The proposal suggests that revenue generated from the administration's aggressive tariff policy could be used to issue direct payments to Americans, excluding high-income earners. This idea, which would likely require congressional approval to be enacted, has been floated before by President Trump and echoes earlier legislation proposed by Republican Senator Josh Hawley of Missouri, which called for smaller tariff rebates. However, the plan's feasibility is under scrutiny, with some estimates suggesting the cost of such a dividend could surpass the total revenue collected from the tariffs.

The U.S. Treasury Department reported collecting $195 billion in customs duties during the first three quarters of 2025. Meanwhile, the U.S. national debt stands at over $38 trillion. Treasury Secretary Scott Bessent has publicly stated that the administration's primary focus for tariff revenue is to reduce this national debt, not to fund direct payments to citizens.

Implications for Kenya's Economy

For Kenya, the implications of this protectionist U.S. trade policy are significant and potentially severe. The Trump administration has implemented a baseline 10% tariff on all imports, a move that directly impacts Kenyan goods entering the U.S. market. This policy shift effectively jeopardizes the preferential, duty-free access Kenya has long enjoyed under the African Growth and Opportunity Act (AGOA), which is set to expire in September 2025.

Kenya's exports to the U.S., valued at approximately $737.3 million in 2024, are now facing increased costs, which threatens to erode their competitiveness. The key sectors that have flourished under AGOA, such as textiles, apparel, coffee, tea, and horticultural products, are particularly vulnerable. The textile industry, a major employer within Kenya's Export Processing Zones (EPZs), faces the starkest challenge, with the new tariffs potentially wiping out profit margins and leading to factory closures and significant job losses. Some analysts project that as many as 180,000 jobs in Kenya could be at risk.

The economic shockwaves extend beyond exports. Kenyan businesses that rely on U.S. imports, especially in the technology, pharmaceutical, and industrial equipment sectors, will face higher operational costs, which could translate to increased prices for consumers. This could also impede critical national infrastructure projects, such as the Digital Superhighway, by increasing the cost of necessary imported equipment.

Navigating a Shifting Global Landscape

The U.S. tariff policy is part of a broader 'America First' strategy aimed at rebalancing trade and revitalizing domestic manufacturing. While Kenya and other East African nations have been spared the even higher country-specific tariffs levied on some other African nations, the baseline 10% duty represents a substantial shift from the previous 0.3% average effective tariff on Kenyan imports. This has led to a worsening trade deficit for Kenya with the U.S., which stood at $45.2 million in 2024.

In response, Kenyan officials are pursuing a multi-pronged strategy. President William Ruto has announced intentions to finalize a bilateral trade agreement with the U.S. by the end of 2025, which would be the first of its kind between Washington and a sub-Saharan African nation. At the same time, Kenya is advocating for a five-year extension of AGOA to provide stability for its exporters. There is also a growing emphasis on diversifying trade partnerships, with a notable turn towards strengthening ties with China and enhancing intra-African trade through the African Continental Free Trade Area (AfCFTA).

The situation remains fluid, with President Trump's dividend proposal adding another layer of complexity to an already challenging international trade environment. For Kenya, the path forward requires careful navigation of geopolitical tensions, strategic trade negotiations, and a concerted effort to bolster domestic economic resilience in the face of rising global protectionism.