How Trump's new 10 per cent tariffs work

On February 20, 2026, the United States Supreme Court ruled that President Donald Trump exceeded his authority by using the International Emergency Economic Powers Act to impose global trade levies.

This decision invalidated the 'Liberation Day' tariffs enacted in April 2025.

Following this ruling, the American administration moved to reimpose a 10% universal tariff using Section 122 of the Trade Act of 1974.

This legislation allows the president to apply temporary import surcharges to address large balance-of-payment deficits.

For the Kenyan exporter as well as the local consumer, these policy shifts change the cost of doing business with the United States.

A tariff is a tax a government adds to goods imported from other countries.

In this context, the tax is collected by the United States Customs and Border Protection at the point of entry.

While often described as a tax on foreign countries, the financial burden falls on the American companies importing the goods.

These firms typically manage increased costs by raising retail prices for consumers or reducing the amount they pay to suppliers.

Kenya primarily exports textiles, coffee, tea, and macadamia nuts to the American market.

Under the African Growth and Opportunity Act, many of these products previously entered the United States duty-free.

Although the American Congress extended this trade agreement through December 2026, the new trade regime applies the 10% baseline tariff to most goods regardless of their status.

The apparel sector is most vulnerable to these changes.

Approximately 70% of Kenyan garment exports are destined for the United States.

A 10% surcharge makes Kenyan clothing more expensive than products from countries with active bilateral free trade agreements.

In 2024, Kenya exported goods worth approximately USD737 million to the United States.

The 10% levy represents an additional cost of over Sh9.5 billion based on those trade volumes.

In November 2025, the American government issued a memorandum exempting certain agricultural products from the reciprocal tariff structure.

Coffee and beef were removed from the levy list to curb food price inflation in the United States.

This provides a reprieve for the Kenyan coffee sector, as high-quality Arabica beans can still reach American roasters without the 10% surcharge.

However, other major exports like tea and macadamia nuts remain subject to the baseline rate.

The 10% tariff acts as a price floor that Kenyan producers must navigate to remain competitive.

When the United States imposes these duties, the Kenyan shilling often experiences volatility.

Increased costs for exporters can lead to reduced foreign exchange inflows, which weakens the Sh129 to USD1 exchange rate.

Furthermore, American machinery and technology exports to Kenya become more expensive if Kenya chooses to retaliate with its own duties.

Kenya is currently pursuing a Strategic Trade and Investment Partnership to secure a permanent bilateral deal.

This framework aims to move beyond the temporary nature of the African Growth and Opportunity Act.

Until such an agreement is finalised, Kenyan goods will continue to face the 10% universal surcharge.