Kenya is among exporters hoping a smaller Trump tariff blow vis-a-vis competitors might help them emerge as winners in the nascent global trade war, but translating the disparity into an advantage will be an uphill struggle.As governments around the world reeled from US President Donald Trump's new tariffs, Kenya voiced optimism about potential advantages over rival textile manufacturers in Asia. Imports from the East African nation, which sent goods worth $737 million to the United States last year, will be charged the minimum 10 percent compared with 46 percent for Vietnam, 44 percent for Sri Lanka and 37 percent for Bangladesh. "With other textile-exporting countries facing much higher tariffs, Kenya could position itself as an alternative sourcing hub for buyers," Trade minister Lee Kinyanjui said last week.Economists said up-and-coming manufacturers in East Africa such as Tanzania and Ethiopia could also benefit, as could Latin American countries such as Brazil, which also received the baseline 10 percent tariff.Any gains for Kenya, however, could be offset by the damage from tariffs to the global economy plus deep-seated weaknesses in its domestic business environment. J.P. Morgan raised its odds of global recession by year-end to 60 percent from 40 percent on Friday after China retaliated against the US tariffs, while Goldman Sachs has raised the odds of a US recession in the next 12 months to 45 percent from 35 percent. The chairman of Kenya's biggest garments manufacturer said the tariffs would pile expenses on companies already facing costs roughly 20 percent higher than global competitors because of steep electricity prices and taxes, and questioned whether international brands would rush to shift operations."A temporary tariff disparity does not create real competitiveness," said Pankaj Bedi, whose United Aryan Ltd supplies US retailers including Target, Walmart and Levi's.Stresses for manufacturers are compounded by the grim outlook for the African Growth and Opportunity Act (Agoa), a US trade initiative passed in 2000 that allows duty-free exports for thousands of products from Africa. Trade experts said the US tariffs were likely to signal the end of Agoa, which expires in September and had been widely expected to be renewed in some form. The tariffs sent chills through the global economy, affecting nearly all of Kenya's trading partners. Most African countries have relatively small export balances with the US but more significant trade relations with the European Union and China, J.P. Morgan said in a note on Monday.Kenya exported $1.35 billion in goods to the EU and $228 million to China in 2023, according to UN data."While the direct impact with the US might be limited, the indirect impact from potential growth slowdown in the EU and China, depending on the veracity of the impact from US tariffs, could yet weigh on these economies," J.P. Morgan said. As well as his bullish initial assessment, Mr Kinyanjui did also take sober note on Monday of the havoc on global markets. "We anticipate there will be a serious impact across all sectors and I think the fears of recession become a very clear challenge, especially for third world countries," he said.Some manufacturers said Kenya would struggle to take advantage of any opening provided by the tariffs because their higher costs largely cancel out the edge from US tariff rate differentials versus competitors."Kenya's exports to the USA, previously duty-free under Agoa, will now be subject to additional costs, reducing their market competitiveness," the Kenya Association of Manufacturers said in a statement. Other manufacturers were nevertheless looking on the bright side. Jaswinder Bedi, whose company makes clothes for American wholesalers, said he planned to press ahead with a new factory that would triple his employees to more than 3,000. (ICE NAIROBI)

Fonte notizia: Business Daily