Relief for Kenya as China Gets Trump to Make Last Minute Change on Trade Tariffs

In Summary

• Trump escalated the U.S.-China trade war by raising tariffs on Chinese imports to 125%, triggering a global market crash, despite pausing new duties for most other countries for 90 days.
• The CBK has downplayed the impact of a new 10% US tariff on Kenyan exports, saying the projected Ksh12.9 billion loss is too small to significantly affect the economy.
• The CBK will impose daily fines on banks that fail to lower loan interest rates in line with its benchmark rate cuts, with penalties of up to Ksh20 million and additional fines for executives.
• Stanbic Bank has withdrawn a court case against the DCI after reaching a settlement over a Ksh933 million dispute involving a reversed transaction in Air Afrik’s account.
• The University of Nairobi is under EACC investigation for irregular land leases amid a financial crisis, while its acting VC was fined Ksh500,000, and Embu University’s VC was fined Ksh3.8 million for misusing salary funds.
• The government collected Ksh6.5 billion through the eTA system, but controversy erupted after the funds were first sent to Swiss firm Travizory, which now threatens legal action over Ksh1.07 billion as Kenya shifts to a locally-hosted platform.
• KDF demolishes risky 11-storey Mombasa building to avert disaster after foundation weakened by borehole.
  
  

The ongoing trade war between China and the United States intensified after President Donald Trump raised tariffs on Chinese imports from 104% to 125%, even as he paused new duties on Kenya and  other countries for 90 days. Reuters reports that the surprise move came just hours after steep tariffs kicked in, triggering a major global stock market crash that wiped out nearly Ksh792 trillion ($6 trillion) in value from U.S. companies. While Trump’s pause offered some relief to global markets—sending indexes like the S&P 500 and Japan’s Nikkei soaring—tensions with China remain high, with Beijing responding with 84% tariffs on U.S. goods. The 90-day freeze excludes duties on steel, aluminium and cars, and does not apply to countries like Canada and Mexico that are still subject to other specific levies. Economists say the market recovery may be short-lived as fears of a global recession and slowed business investment persist.

The Central Bank of Kenya (CBK) has downplayed the effect of a new 10% US tariff on Kenyan exports, estimating a possible loss of only Ksh12.9 billion, which is less than 1.2% of Kenya’s total exports, as reported by The Business Daily. CBK Governor Kamau Thugge said the hit is too small to significantly affect the economy or exchange rate, even as fears of a global recession grow. The US has applied the tariff as part of a wider trade move targeting multiple countries, including Kenya, over issues like high local tariffs, corruption, and complex customs processes. Kenya exported goods worth Ksh64.2 billion to the US in 2023, with about Ksh50.8 billion of these enjoying duty-free access under the Agoa agreement. However, businesses are expected to face higher costs, especially in the textile sector. Experts have mixed views, with some warning of possible recession effects, while others expect countries to negotiate trade deals with the US to ease the pressure. Kenya’s main imports from the US include machinery, pharmaceuticals and cereals, with the country running a trade deficit of Ksh48.5 billion.

In a report by The Business Daily, the Central Bank of Kenya (CBK) will from June start imposing daily fines on commercial banks that fail to reduce their loan interest rates in line with cuts made to its benchmark lending rate. The regulator launched inspections in February to check compliance with its risk-based pricing model and plans to inspect all 38 banks by the end of June. So far, only five banks — Citibank, Absa, Standard Chartered, Victoria Commercial Bank, and Stanbic — have lowered rates in line with CBK’s 2.25 percentage point cut. Defiant lenders could face fines of up to Ksh20 million or three times their illegal gains, with additional daily penalties of Ksh100,000 and individual bank executives risking fines of Ksh1 million.

In a report by The Business Daily, Stanbic Bank has withdrawn a court petition against the Directorate of Criminal Investigations (DCI) after both parties reached an agreement to end a long-running dispute involving Ksh933.11 million that had been deposited and later reversed from Air Afrik Limited’s account in South Sudan. The DCI agreed to drop investigations and promised not to press charges against the bank, its CEO Joshua Oigara, or its staff in relation to the credit note issued by the Bank of South Sudan. The dispute arose from a February 2016 transaction in which Air Afrik’s account was credited with funds that Stanbic later claimed were sent in error and reversed. Air Afrik had demanded compensation after the withheld funds led to the cancellation of a Ksh2.58 billion plane leasing deal with the South Sudan government.

The University of Nairobi is under investigation by the Ethics and Anti-Corruption Commission (EACC) over the irregular leasing of multiple parcels of land, including 100 acres in Kibwezi and 20 acres to Samba Cafe Hotel, even as MPs fined acting Vice Chancellor Margaret Hutchinson Ksh500,000 for failing to give proper answers to audit questions. The university is facing a financial crisis, with debts amounting to Ksh7.8 billion in pension arrears, Ksh2.8 billion owed to KRA, and loans from local banks. The management also admitted to unlawfully creating up to 20 senior posts. Meanwhile, University of Embu VC Daniel Njiru was fined Ksh3.8 million for diverting Ksh18.5 million meant for salaries to renovate buildings without formal approval, as reported by The People's Daily.

The government collected Ksh6.5 billion from the Electronic Travel Authorisation (eTA) system, but it has emerged that the money was first sent to Swiss bank accounts controlled by the contracted firm, Travizory Border Security SA. The firm earned Ksh1.5 billion from the deal before a fallout led to the cancellation of the contract, with Travizory now threatening to sue and withhold Ksh1.07 billion still in their accounts. According to The Star, the government has since replaced the system with a locally-hosted solution under e-Citizen using Pesaflow, but the Swiss company claims the new platform copied their system. Interior CS Kipchumba Murkomen defended the move as a pilot project, highlighting increased tourism revenue from eTA-related growth, while MPs raised concerns over transparency, control, and rising dependency on outsourced tech platforms.

The Kenya Defence Forces (KDF) on Wednesday, April 9, successfully brought down an 11-storey building in Mombasa using explosives after it was found to be structurally unsafe due to illegal borehole drilling that damaged its foundation. According to The Star, The demolition, carried out at noon, was coordinated with other national and county agencies, with no injuries or damage to nearby buildings reported. Residents and institutions within a 1.2 kilometre radius, including Coast General Hospital, were evacuated before the controlled blast. Governor Abdulswamad Nassir had earlier confirmed the building's columns had sunk by about three metres, prompting the urgent decision to demolish it and prevent loss of life.