On 20 January, Kenyan Trade Minister Lee Kinyanjui announced that Kenya had concluded a preliminary duty-free trade agreement with China.
- The agreement, which is expected to pave the way for a bilateral treaty, grants 98% of Kenyan exports tariff-free access to Chinese markets.
- It underlines Kenya’s growing preference for economic cooperation with China, amid growing volatility in the US’s foreign policy for Africa.
- Despite pressures from the US, Kenya is unlikely to distance itself from China, especially as it increasingly relies on Chinese leniency over the repayment of its debt to foster debt sustainability.
- Instead, Kenya will seek to demonstrate its political and diplomatic alignment with the US, including by participating in US President Donald Trump’s controversial peacebuilding and donor assistance programmes.
- The US is likely to toughen its stance towards corruption in Kenya, exposing Kenyan officials to targeted sanctions in the coming years. However, these are unlikely to be widespread.
Agriculture targeted.
Kinyanjui said that the deal will unlock “economic potential” for Kenyan exporters, especially in the agricultural sector. It is still unclear what concessions Kenya offered China. According to sections of the local media, the deal is intended to benefit tea, coffee, and avocado producers.
Business Insider Africa reported on 11 January that Kenya had delayed signing a bilateral agreement with China due to pressure from the US. However, Kenyan Principal Secretary for Foreign Affairs Korir Sing’Oei denied this on 13 January. Sing’Oei insisted that Kenya does not expect its trade agreement with China to cause tensions with the US or affect its participation in the African Growth and Opportunity Act (AGOA), which grants African countries duty-free access to US markets.
AGOA expired in September 2025, exposing Kenyan exporters to tariffs of up to 28%. The US House of Representatives (lower house) approved a three-year extension of AGOA on 12 January, but this needs to be endorsed by the Senate and Trump to become effective.
Both the US and China are important export trade partners for Kenya, earning USD 662.51 m and USD 196.55 m, respectively, in 2024, according to the IMF.
China’s increased leverage.
The deal underlines Kenya’s continued pragmatism as it navigates the worsening competition between the US and China. Despite being closely politically aligned with the US, Kenya is unlikely to cede to pressures from the US to distance itself from China. In addition to being an important trading partner, China is also Kenya’s largest bilateral creditor. As debt service increasingly strains expenditure, Kenya will increasingly rely on the flexibility of China to mitigate the growing stress on foreign exchange reserves. In October 2025, Kenya secured a currency swap of its USD 3.5 billion unpaid loan from China (from USD to Yuan), saving the country USD 215 million in annual repayment fees. More broadly, China’s growing desire to erode the US’s global influence aligns with Kenya’s long-term economic agenda, especially in the face of growing protectionism in the US. In this context, Kenya is unlikely to take the risk of upsetting existing dynamics with China. Despite US pressures, President William Ruto will continue to prioritise bilateral engagements with China on economic cooperation.
Continued security and political cooperation with the US is equally important to Kenya, but US trade policy has become increasingly erratic under Trump, boosting China’s bargaining power. For example, in November 2025, the US suspended a USD 60 m grant intended to support urban transport infrastructure development in Kenya, only two years after the previous administration approved the grant. Although Kenya will continue to pursue alternative trade deals with the US, it is unlikely to do so at the expense of more stable partners such as China. These dynamics also mean that Kenya will increasingly prioritise political and security cooperation over economic cooperation in its policy towards the US. This stance risks angering the US, which has stepped up efforts to erode China’s economic influence in Africa.
Tough balancing act for Kenya.
Nonetheless, in our view, Kenya will most likely be able to prevent a major backlash from the US by offering concessions on other issues. In particular, Kenya will be keen to demonstrate its alignment with US security agendas in Africa. Ruto is also likely to take considerable care to repair his image in the region, which has been increasingly tainted by allegations of interference in domestic conflicts. This will aim to protect Kenya’s role as a facilitator of US security and diplomatic projects in the region, especially peacebuilding. Kenya will also embrace the increasingly transactional stance of the US towards Africa, including by agreeing to controversial terms in exchange for financial assistance and investment. For instance, Ruto will continue to push for the implementation of an MoU it signed with the US in December 2025, even as the deal faces stiff resistance from sections of civil society and the political class. In the deal, the US commits USD 1.6 billion to support health systems in Kenya in exchange for access to Kenyan health data.
This strategy is likely to sustain broad harmony between Kenya and the US over the next few years, even though brief periods of tensions will increasingly occur. These tensions will primarily be driven by attempts by the US to use the rampant corruption in Kenya to push for a tougher stance towards Chinese firms. We maintain that although smaller firms are increasingly likely to be targeted by anti-corruption crackdowns, the authorities will retain their friendly attitude towards most firms, especially larger companies in the infrastructure, mining, and construction sectors. Meanwhile, the US is increasingly likely to impose targeted sanctions on Kenyan officials and businessmen for allegations of graft, worsening integrity and reputational risks for businesses closely linked with the government.
Value addition.
The Kenya-China duty-free deal could help reduce a trade USD 4.1 billion imbalance between the two countries, in the long term. However, this will depend on the extent to which the Kenyan government can invest in export value addition in the agricultural sector and develop its nascent mining sector. The two sectors account for most of Kenya’s exports to China. However, they are both prone to extensive political interference, which, coupled with fiscal constraints, could complicate the implementation of reforms.
Sources
Kenya halts China trade deal following pressure from the US, Business Insider Africa
Kenya strikes preliminary duty-free trade deal with China, Reuters
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