Kenyan firms caught in tariff refund web after US court blow

Workers at the New Wide Garments Kenya EPZ Limited in Athi River, Machakos county on May 20, 2022. [File, Standard]

Kenyan manufacturers, especially those in the multi-billion-shilling apparel industry, are facing a difficult legal and administrative process to recover millions of dollars in import duties paid to the US Government. The President Donald Trump administration has indicated it may not return the money quickly.

This comes after a major February 20 ruling by the US Supreme Court, which said Trump went beyond his legal powers by using a 1977 emergency law—the International Emergency Economic Powers Act (IEEPA)—to impose wide-ranging import tariffs, including on goods from Kenya.

While the ruling overturned a cornerstone of the Trump administration’s economic agenda, the US court remained silent on the fate of an estimated $133 billion (Sh17.16 trillion) already collected from global businesses.

Kenyan businesses which export approximately $740 million (Sh95 billion) worth of goods to the US annually, are among those affected by the economic fallout from the tariffs. 

The US Kenya trade sustains more than 66,000 jobs, largely within Export Processing Zones (EPZs). Following the US Supreme Court ruling, President Trump told reporters on Friday that any effort to reclaim the money could be “locked up in litigation for years.” 

US Treasury Secretary Scott Bessent echoed this position, describing the funds as “in dispute” and warning of a prolonged settlement process.

The development is complex due to the recent lapse of the African Growth and Opportunity Act (AGOA). The duty-free programme expired in September 2025, forcing Kenyan exporters to pay standard tariffs for five months until President Trump signed a one-year extension in February 2026.

The new policy, which secures AGOA through the end of 2026, includes a retroactive clause allowing importers to claim refunds for standard “ad valorem” duties paid during the gap period (September 30, 2025, to February 3, 2026).

US Customs and Border Protection (CBP) has established a tough framework for these claims. Importers have a strict 180-day window ending on August 2, to file for refunds. 

The US Government then has 90 days to process payments, though notably, no interest will be accrued on the held funds.

However, the US Supreme Court ruling has created a “double-track” problem for Kenyan firms. While the AGOA extension covers standard duties, it explicitly excludes “emergency” tariffs. “The situation is now significantly more complicated,” said a Kenyan exporter who sought anonymity. 

While a Kenyan apparel firm can use the CBP mechanism to reclaim standard duties, the separate 10 per cent IEEPA tariffs paid on the same shipments remain trapped in legal limbo. 

Furthermore, the Trump administration has already moved to replace the struck-down measures with a new 10 per cent global baseline tariff that applies to almost all imports, including those from Kenya.

Legal experts suggest that recovering the IEEPA-specific funds will likely require individual lawsuits against the US government, a path that favours  large conglomerates with the capital to fund years of litigation, potentially leaving smaller Kenyan factories behind.

The one-year AGOA extension has provided a temporary reprieve for factory floors, allowing for short-term production planning. 

The duration is far shorter than the three-year renewal originally sought by the US House of Representatives, maintaining a cloud of long-term instability over the sector.

Some Kenyan businesses said the capital tied up in Washington represents a critical loss of liquidity. “We have been operating on a knife’s edge. The signing of the AGOA extension allows us to breathe, but the prospect of years of litigation for our refunds is chilling,” said a managing director of a textile factory in Athi River, speaking on condition of anonymity.