US President Targets Nations With Value-Added Tax on American Imports
By DAYO ADESULU
Washington, D.C. – United States President Donald Trump has announced plans to impose reciprocal tariffs on countries that apply Value Added Tax (VAT) on US imports, a move that could impact Kenya and other nations.
Why Trump Is Targeting VAT Nations
In a statement on his official X handle on Monday, February 17, 2025, Trump argued that the VAT system puts US exports at a disadvantage, making it an unfair trade practice.
Trump directed the Secretary of State, Secretary of Commerce, Secretary of the Treasury, and the US Trade Representative (USTR) to investigate and enforce tariffs on affected nations.
“For purposes of fairness, we will charge a reciprocal tariff—whatever countries charge the US, we will charge them—no more, no less! Countries using the VAT system, which is far more punitive than a tariff, will be treated accordingly,” Trump stated.
How Kenya’s VAT Affects Trade
Kenya applies a 16% VAT on imports from the US and other countries, while exports from Kenya are zero-rated. This tax structure makes American products more expensive in Kenya, potentially reducing demand for US goods.
The US, however, does not charge Kenyan exports entering its market. With Trump’s new policy, Kenyan exports could soon face a 16% tariff, impacting trade relations between the two countries.
Impact of US Tariffs on Kenya
Economic analysts predict that Trump’s reciprocal tariff policy could significantly affect Kenya’s export earnings.
Kenya exports goods worth $458.58 million (KSh 59.2 billion) annually to the US, including apparel, coffee, tea, and minerals.
A 16% US tariff on Kenyan goods could reduce export competitiveness, affecting key industries.
Investment expert Aly-Khan Satchu warns that Kenya no longer enjoys preferential treatment from the US, as it did under the Biden administration.
“Kenya was seen as a key pivot state in Africa. Those days are in the rearview mirror. I expect tariffs to be imposed soon, and Kenya is essentially powerless to stop it,” Satchu stated.
USAID Funding and Economic Concerns
Trump’s trade stance comes amid tensions over USAID funding cuts, which have already led to job losses and stalled development projects in healthcare, education, and agriculture.
USAID employees have sued Trump and Secretary of State Marco Rubio in an attempt to reverse funding cuts, but the administration remains firm on its “America First” trade and foreign aid policies.
What’s Next for Kenya?
Kenya’s President William Ruto is yet to respond to the looming tariffs, but economic analysts predict that Kenya may seek alternative markets to counter the potential trade setback.
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#TrumpTariffs, #USKenyaTrade, #KenyaEconomy, #ValueAddedTax, #TradeWar, #ReciprocalTariffs, #BreakingNews, #USAID, #DonaldTrump,
