Record US Spending Meets New Kenyan Trade Hurdles

WASHINGTON D.C. – American consumers are projected to spend a record-breaking sum of over $1 trillion during the November and December 2025 holiday season, according to multiple economic forecasts. The U.S. National Retail Federation (NRF), in its annual forecast released on Monday, November 6, 2025, projected that holiday sales will grow between 3.7% and 4.2% over 2024, reaching between $1.01 trillion and $1.02 trillion for the first time in history. This unprecedented spending occurs despite consumer concerns over persistent inflation, which stood at 3% in September 2025, and the economic uncertainty stemming from new trade tariffs.

This forecast presents a complex and pivotal scenario for Kenyan businesses. While a booming U.S. market would typically signal a lucrative period for Kenya's top exports like apparel, coffee, and macadamia nuts, the recent expiration of the African Growth and Opportunity Act (AGOA) has fundamentally altered the trade landscape. The 25-year trade pact, which granted duty-free access to the U.S. market for thousands of African products, officially expired on Tuesday, October 1, 2025.

The Post-AGOA Reality for Kenyan Exporters

The end of AGOA, compounded by the imposition of a baseline 10% tariff on Kenyan goods by the Trump administration in April 2025, has created significant headwinds. The United Nations Conference on Trade and Development (UNCTAD) warned in September 2025 that without AGOA, Kenya's average weighted trade tariff with the U.S. could nearly triple from 10% to 28%.

The impact is most acute in the textile and apparel sector, which has been a cornerstone of the Kenya-U.S. trade relationship. In 2024, Kenya's apparel exports to the U.S. under AGOA reached a record KSh 60.6 billion, and the program supported over 66,000 direct jobs, a majority held by women. Industry leaders now warn that the sector's competitiveness against low-cost Asian producers is severely eroded. Pankaj Bedi, a leading Kenyan apparel exporter, stated in October 2025 that without a preferential deal, the industry has "zero chance to compete" and that the "whole house of cards will collapse very quickly".

Data from the first half of 2025 already showed signs of distress. According to the Kenya National Bureau of Statistics (KNBS), exports of cotton trousers and shorts saw a decline, while coffee exports surged by 83.5% to KSh 5.71 billion, overtaking apparel as the top export to the U.S. for that period. This shift highlights the immediate impact of the trade deal uncertainty on the garment industry.

A Test of Resilience: Will US Consumers Absorb Higher Costs?

The central question for Kenyan exporters this holiday season is whether record U.S. consumer demand will be sufficient to overcome the new tariff barriers. U.S. retailers and consumers are expected to face higher prices on imported goods, including apparel. A survey by consulting firm PwC in September 2025 found that concerns about tariffs and elevated prices are making value-conscious choices a defining feature of the season, with gift spending expected to drop by 11% on average.

While the NRF remains bullish on overall spending, its chief economist, Mark Mathews, acknowledged that tariffs have induced an uptick in consumer prices, forcing retailers to try and hold the line on prices amid the uncertainty. For Kenyan products, this means a direct test of their price elasticity in a market where they no longer have a competitive edge. The record spending provides a potential lifeline, but it is shadowed by the risk that price-sensitive American shoppers may opt for cheaper alternatives from other manufacturing hubs not subject to the same tariff increases.

Uncertainty Over Future Trade Deal

The Kenyan government is actively engaged in negotiations to secure a new trade framework. As of mid-November 2025, discussions for a bilateral Strategic Trade and Investment Partnership (STIP) are ongoing, with Kenyan officials expressing optimism for a deal by the end of the year. However, reports also suggest the White House is considering a short-term, one-year extension of AGOA to provide a temporary cushion.

Speaking at a forum in Nairobi on Friday, November 14, 2025, Investments, Trade and Industry Cabinet Secretary Lee Kinyanjui called for proactive engagement in a post-AGOA era, emphasizing a shift towards a reciprocal, investment-driven partnership. Experts like Gavin van der Burg, a US-Africa trade specialist, noted at the same event that AGOA's expiry should be seen as a "catalyst for innovation rather than retreat". Despite this forward-looking sentiment, the immediate future for thousands of workers and hundreds of businesses remains contingent on the outcome of these high-stakes negotiations and the purchasing decisions of millions of American holiday shoppers in the coming weeks.