Kenyans worry a US duty-free trade deal might end and expose them to Trump's tariffs

Associated Press

22-05-2025

NAIROBI, Kenya (AP) — It's crunch time for the maker of Levi's and Wrangler jeans in Kenya's capital, Nairobi. Hundreds of sewing machines whir in a crowded, air-conditioned factory. On another floor, workers pack clothes destined for the U.S. market.
The fate of about 16,000 workers in the factory at the United Aryan export processing zone hangs in the balance. In September, a duty-free trade agreement between Kenya and the United States could expire under the African Growth and Opportunity Act, or AGOA.
The factory's founder, Pankaj Bedi, said manufacturers would be unable to compete well in the U.S. market if the AGOA agreement is not renewed, due to the difficult business environment in sub-Saharan Africa.
Without AGOA — meant to benefit African nations that meet certain U.S. expectations in areas including governance and human rights — many Kenyan goods would no longer have duty-free access to the U.S. market. And they would be exposed to the uncertainty of the Trump administration's global tariff campaign.
It's a concern across the continent. South African President Cyril Ramaphosa, speaking to journalists after his Oval Office meeting with President Donald Trump, noted that AGOA is 'going to be further discussed ... it is top of mind for them as well' in the U.S. administration.
Bedi said his business has benefited from 25 years of the AGOA agreement but will not survive if the deal is not extended again.
'This time around, we are hoping that President Trump will pass it for a longer period, then a long-term strategy can come in play,' he said. The longest extension has been for a decade.
In making his pitch, Bedi said he believes that Africa offers the perfect alternative sourcing to Asia with its large and youthful workforce. Seventy percent of people in sub-Saharan Africa are under 30, according to the United Nations.
'I think the real shift of supply chain will happen, and Africa is the last frontier. We cannot go to the moon and start manufacturing there,' Bedi said.
Kenya's government would not comment on the deal or why it might be under threat.
Economist Wangari Muikia said the new U.S. tariffs reflect a shift towards reviving American manufacturing, 'consistent with Trump's priority to re-shore jobs,' but warned that ending AGOA may 'strain diplomatic ties and weaken American soft power.'
African governments have promoted AGOA as a major job creation avenue.
In Kenya, AGOA has led to the creation of 66,000 jobs since the program began in 2000, according to government statistics published in 2024. Kenya's overall unemployment rate is 12.7%, but the rate among those under 35 is 67% — part of a wider issue for much of Africa's booming young population.
In 2023, Kenya's total exports under AGOA including agricultural products, apparel and handicrafts were worth $510 million, according to the U.S. Department of Commerce. United Aryan said it exports an average of 8 million jeans annually from Kenya to the U.S.
But some African governments and leaders have objected to AGOA's conditions. Ugandan President Yoweri Museveni criticized the program after it was used in 2023 to pressure him on his stance on homosexuality.
Kenya's former ambassador to the U.N., Martin Kimani, said in an interview with The Associated Press that he believes AGOA's unpredictability has not been good for the economy.
'The real measure of a trade regime is its predictability and its integration into long-term production,' he said. 'The tariffs and the program's upcoming expiration signal that AGOA is not a stable foundation for African industrial growth.'
If Kenya's AGOA deal isn't extended, the country will need to look for alternative markets like the African Continental Free Trade Area to ensure jobs are not lost and manufacturers keep exporting goods, said economist James Shikwati, founder and director of The Inter Region Economic Network.
The continental free trade area has shortcomings that include underdeveloped infrastructure that makes it expensive to transport goods, mistrust that makes it hard for some countries to be fully open to trading with neighbors and a lack of strong institutions that can mediate trade disputes.
Judging by the Trump administration's recent trade-related policies, every trade partner will need to reevaluate its engagement with the U.S., Shikwati added.
For those whose jobs could be affected, there is concern.
United Aryan employee Valdes Samora hopes to keep the sewing machines humming, and that livelihoods will not be lost after September.
The 59-year-old father of nine has been working at the company for two decades. His wife also works there. Workers are paid an average of $200 per month, in a country where the minimum wage is $115.
'I never completed my education, but through this work I have been able to educate my children,' he said.