Tax 101: Tariffs are taxes
Category: Law and Economics
By: Leo Kipkogei Kemboi,
There is a big global debate on tariffs, their effects, and who pays for them, creating misconceptions. The broader trade strategy premised on Tariffs reflects a worldview rooted in 19th-century mercantilism, emphasizing protectionism and an aggressive use of tariffs.[1] The misconception that tariffs aren’t taxes stems from several factors. Framing plays a significant role. Tariffs are often described as fees or duties on imported goods, obscuring that they are essentially taxes paid by domestic consumers. Tariffs are taxes levied by one nation on products and services imported from another in order to influence such imports for various purposes including political, revenue amongst others. [2]
The use of tariffs contributes to the misunderstanding. Legal incidence and economic incidence of a tariff are difference. Legal incidence is a decision of the law. Since they’re levied on imports, people may assume they primarily affect foreign entities. However, the cost is often passed down to consumers through increased prices. [3] Furceri and others (2019) find that tariff increases lead, in the medium term, to significant declines in domestic output and productivity, higher unemployment and inequality, real exchange rate appreciation, and minimal effects on the trade balance, with these impacts being more pronounced during economic expansions, in advanced economies, and when tariffs rise rather than fall.[4] Importing businesses adjust to these costs based on the price elasticity of demand for their goods.
If demand is inelastic, they can pass most of the cost to consumers through higher prices without significantly reducing sales. For example, essential goods like prescription medication or fuel tend to have inelastic demand, meaning consumers will continue purchasing them even at higher prices because they have fewer substitutes. if demand is elastic, raising prices could lead to a sharp drop in sales, forcing businesses to absorb more of the cost, thereby reducing their profit margins. This is common with luxury items or non-essential goods like high-end electronics or fashion brands, where consumers can easily switch to substitutes or delay purchases in response to price increases.[5]
Political rhetoric also plays a role in misconceptions about Tariffs. Politicians often present tariffs as beneficial for domestic industries and workers, downplaying the negative consequences for consumers and negative cyclical effects on the general economy. This rhetoric creates confusion about who ultimately bears the burden.[6] The complexity of tariffs’ economic effects contributes to the misconception. Factors like exchange rates and global trade dynamics make it difficult for many to grasp how tariffs function as taxes and their overall economy. The complex interplay of excise taxes, tariffs, and imports further complicates the issue. Tariffs are taxes on imported goods that ultimately affect domestic consumers through higher prices. [7] While they can generate government revenue and offer some protection to domestic industries, they also lead to economic inefficiencies, including loss of economic growth jobs and harm to consumers. [8] The impact of tariffs extends to various stakeholders, including local governments, businesses, and consumers.
Kenyan sugar tariffs and their role as a tax serve as one example. Because of these tariffs, imported sugar becomes more expensive, increasing the competitiveness of domestically produced sugar. Kenya imposes a 100% ad valorem duty on sugar imports from countries outside the East African Community (EAC) and the Common Market for Eastern and Southern Africa (COMESA). Nonetheless, sugar imports from COMESA and EAC nations are allowed duty-free entry. However, Kenya limits duty-free COMESA sugar imports to 350,000 metric tonnes (MT) as part of a safeguard measure. [9]
What is Kenya’s Tariff Structure?
Kenya’s tariff structure, guided by the East African Community Common External Tariff, operates within the international harmonized product classification system. Customs duties, calculated using the EAC CET, range from 0% to 100%, with an average rate of 25%. However, “sensitive items” listed in Schedule 2 of the EAC CET attract higher rates exceeding 25% to protect local industries. The EAC CET employs a four-band system with rates of 0%, 10%, 25%, and a maximum of 35%. [10]
Under the 2015 Excise Duty Act, excise duties target specific goods like alcohol, tobacco, fuel, and luxury items, varying rates based on their excisable classification. A 16% Value Added Tax applies to imports, calculated on the CIF value plus customs duty and other applicable taxes, increasing the overall import cost. Additional charges include a 3.5% Import Declaration Fee and a 2% Railway Development Levy based on the CIF value, contributing to infrastructure development. The 2023 Finance Act introduced an Export and Investment Promotion Levy on specified imported goods, with either 17.5% or 10% rates.[11] [12]
How Tariffs Affect Economic Outcomes
Erica York, a Policy Economist at the Cato Institute, developed a rationale for how tariffs affect the economy, emphasizing the role of intention and pass-through costs in determining their economic impact. The explanation is summarized below.[13]
“The impact of a tariff depends on whether it is intended to protect domestic industry or raise government revenue. When a country (“Home”) imposes a 25% tariff on imported widgets that originally cost $100, raising their price to $125, the burden of the tariff depends on whether the foreign seller lowers prices. If the foreign seller does not reduce prices, consumers in the home must either continue buying the more expensive imported widget or switch to the domestic alternative, priced at $115. If they switch, no tariff revenue is collected, but domestic producers benefit; if they continue buying, the government collects $25 in tariff revenue. Alternatively, suppose the foreign seller lowers prices to $80. In that case, the final cost with the tariff remains $100, meaning the foreign seller absorbs part of the tariff cost, reducing their profit margins while keeping imports competitive.
Beyond direct pricing effects, tariffs also influence broader economic dynamics. Consumers at Home pay higher prices, reducing their disposable income, while domestic producers may face higher costs if they rely on imported inputs. Foreign sellers may take losses to maintain market access, and fewer imports mean fewer dollars flow abroad, strengthening the home currency and making its exports more expensive, which harms local exporters. Ultimately, the burden of tariffs is distributed among consumers paying higher prices, producers facing higher costs or reduced demand, exporters struggling with currency appreciation, and foreign sellers absorbing part of the costs. If tariffs are too high, they block imports entirely and fail to generate revenue; if they are too low, they provide little protection for domestic industries. Ultimately, tariffs create economic distortions that affect businesses, consumers, and global trade.”
Other Economic Effects
However, the economic incidence of tariffs is largely borne by domestic consumers and businesses through several market mechanisms that distort prices, supply, and competition.
(i) One of the most direct effects of tariffs is an increase in the prices of imported goods, leading to inflationary pressures. Since tariffs function as an additional cost on imports, firms in the domestic market, starting with importers, adjust their pricing strategies to maintain profit margins. This cost is passed through the supply chain to wholesalers, retailers, and consumers. The extent of this inflationary impact depends on the price elasticity of demand for the affected goods. If imported goods are inelastic necessities with few substitutes (e.g., energy and medical supplies), consumers will bear most of the tariff burden, leading to stronger inflationary effects. Conversely, consumers may switch to domestic alternatives if demand is elastic, mitigating price increases.[14]
(ii) Higher tariffs discourage foreign producers from exporting to the tariff-imposing country, leading to a contraction in supply and potential market shortages. A Tariff is a major trade barrier.[15] Reducing import volume creates artificial scarcity, which drives up prices for imported goods and domestic substitutes facing less competition. This effect introduces deadweight loss, where market inefficiencies arise as consumers pay higher prices or forgo consumption altogether. However, the price increase’s magnitude depends on domestic production’s responsiveness. If local producers cannot scale up output quickly, shortages will be more pronounced, exacerbating price hikes.
(iii) Even when tariffs do not directly apply to finished domestic goods, they indirectly raise costs when imported intermediate goods or capital inputs are taxed.[16] This creates uncertainty in the economy.[17] Many industries rely on global supply chains for raw materials and production components, and increased costs at upstream stages propagate through the economy, leading to higher marginal costs of production and, consequently, higher prices for domestically produced goods. However, market competition depends on firms’ ability to pass on these higher costs. In highly competitive sectors, businesses may be forced to absorb some of the tariff burden, squeezing profit margins rather than raising prices.
(iv) Tariffs shield domestic businesses from international competition by raising the relative cost of imported goods, so preventing foreign competitors from entering the market. This reduction in market rivalry can allow domestic producers to exert market power, raising prices or reducing output, leading to allocative inefficiency and declining consumer welfare. Over time, protectionism discourages innovation and productivity growth if domestic firms face weaker incentives to improve efficiency.[18] However, the degree of price manipulation depends on the pre-existing market structure. Suppose the domestic industry already has strong competition. In that case, the price impact will be limited, but if the market is dominated by a few firms, the risk of anti-competitive behaviour is higher.
(v) Tariffs can influence currency markets by reducing the demand for foreign exchange to purchase imports. This lower demand for foreign currency may lead to nominal appreciation of the domestic currency, making foreign goods relatively cheaper and partially offsetting some of the tariff’s price impact.[19] However, the currency response is complex and depends on capital flows, investor confidence, and monetary policy. If tariffs lead to uncertainty about future trade policy, investors may withdraw capital, causing currency depreciation instead of appreciation. A stronger currency makes exports more expensive for foreign buyers, potentially worsening the trade balance. In economies with rigid price settings, currency fluctuations may contribute to imported inflation and distort investment decisions.
Conclusion
Tariffs create economic distortions that impact prices, production, trade, and overall efficiency. While intended to protect domestic industries or generate revenue, they often lead to inefficiencies and unintended costs.
From a welfare economics perspective, tariffs cause deadweight loss by raising prices, reducing consumer surplus, and limiting market choices. Domestic producers may benefit in the short run but face higher input costs if they rely on imports. Tax incidence analysis shows that when demand is inelastic, consumers bear most of the burden, fuelling inflation. Conversely, when demand is elastic, firms absorb more of the cost, squeezing profits and discouraging investment. In international trade, tariffs distort comparative advantage, misallocate resources, and lower total factor productivity (TFP).[20] They can also trigger retaliatory trade policies, leading to negative-sum outcomes. Tariffs influence exchange rates by reducing import demand, and they may strengthen the domestic currency, making exports more expensive and harming exporters. Trade liberalization remains a more effective path to sustainable growth.
References
[1] Rediker, Douglas A. “The Consequences of Trump’s Tariff Threats.” Brookings, December 11, 2024. https://www.brookings.edu/articles/the-consequences-of-trumps-tariff-threats/.
[2] Nevil, Scott. “What Is a Tariff and Why Are They Important?” Investopedia, April 1, 2024. https://www.investopedia.com/terms/t/tariff.asp.
[3] TaxEdu. “Tariffs Are Taxes Too.” Tax Foundation, October 17, 2023. https://taxfoundation.org/taxedu/videos/tariffs-are-taxes/.
[4] Furceri, Davide, Swarnali A. Hannan, Jonathan D. Ostry, and Andrew K. Rose. Macroeconomic consequences of tariffs. No. w25402. National Bureau of Economic Research, 2018. https://www.imf.org/en/Publications/WP/Issues/2019/01/15/Macroeconomic-Consequences-of-Tariffs-46469
[5] Kemboi, Leo Kipkogei. “On Efficiency, Equity, and Optimal Taxation: Reforming Kenya’s Tax System,” September 20, 2024. https://ieakenya.or.ke/?wpdmdl=3486.
[6] Tannenbaum, Carl. “The Truth about Tariffs | Weekly Economic Commentary | Northern Trust.” Northern Trust, July 3, 2024. https://www.northerntrust.com/middle-east/insights-research/2024/weekly-economic-commentary/the-truth-about-tariffs.
[7] See Analysis by Bank of Canada on effects of Trump Tariffs. Bank of Canada. “Evaluating the Potential Impacts of US Tariffs.” Bankofcanada.ca, 2025. https://www.bankofcanada.ca/publications/mpr/mpr-2025-01-29/in-focus-1/.
[8] Hufbauer , Gary Clyde , and Sean Lowry. “US Tire Tariffs: Saving Few Jobs at High Cost.” PIIE, April 2012. https://www.piie.com/publications/policy-briefs/us-tire-tariffs-saving-few-jobs-high-cost.
[9] Snyder, Matthew , and Kennedy Gitonga. “Sugar Annual- Kenya,” April 23, 2024. https://apps.fas.usda.gov/newgainapi/api/Report/DownloadReportByFileName?fileName=Sugar%20Annual_Nairobi_Kenya_KE2024-0002.
[10] EAC. “Tariff Regimes.” Eac.int, 2015. https://www.eac.int/customs/tariff-regimes.
[11] Kenya Revenue Authority. “Key Highlights of the Finance Act 2023 – KRA.” www.kra.go.ke, 2024. https://www.kra.go.ke/popular-links/key-highlights-of-the-finance-act-2023.
[12] Kitimo, Anthony. “Kenya Begins New Railway Levy Implementation.” The EastAfrican, December 28, 2024. https://www.theeastafrican.co.ke/tea/business-tech/kenya-begins-new-railway-levy-implementation-4871816.
[13] York, Erica. “Separating Tariff Facts from Tariff Fictions.” Cato.org, 2024. https://www.cato.org/publications/separating-tariff-facts-tariff-fictions.
[14] Comin, Diego, and Robert Johnson. “Tariffs Are Coming: How Trade Dynamics Will Shape Aggregate Demand and Inflation.” CEPR, January 25, 2025. https://cepr.org/voxeu/columns/tariffs-are-coming-how-trade-dynamics-will-shape-aggregate-demand-and-inflation.
[15] Radcliffe, Brent. “The Basics of Tariffs and Trade Barriers.” Investopedia, June 26, 2024. https://www.investopedia.com/articles/economics/08/tariff-trade-barrier-basics.asp.
[16] York Erica. “Tariffs Targeting Intermediate Goods Go into Effect | Tax Foundation.” Tax Foundation, July 6, 2018. https://taxfoundation.org/blog/tariffs-targeting-intermediate-goods-go-effect/.
[17] Edelberg, Wendy, and Maurice Obstfeld. “Tariffs on All Imports Would Create Chaos for Business.” PIIE, October 7, 2024. https://www.piie.com/blogs/realtime-economics/2024/tariffs-all-imports-would-create-chaos-business.
[18] Irwin, Douglas A. “Introduction to” Clashing over Commerce: A History of US Trade Policy”.” In Clashing over Commerce: A History of US Trade Policy, pp. 1-27. University of Chicago Press, 2017. https://www.nber.org/system/files/chapters/c13850/c13850.pdf
[19] Haw, Jared. “Understanding the Impact of Tariffs on Exchange Rates and Production Costs.” epower-corp, November 17, 2024. https://www.epowercorp.com/single-post/understanding-the-impact-of-tariffs-on-exchange-rates-and-production-costs.
[20] Zymek, Robert. “Back to Basics: Total Factor Productivity.” IMF, September 3, 2024. https://www.imf.org/en/Publications/fandd/issues/2024/09/back-to-basics-total-factor-productivity-robert-zymek.
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Tax 101: Tariffs are taxes
| Post date: Fri, Feb 14, 2025 |
| Category: Law and Economics |
| By: Leo Kipkogei Kemboi, |
There is a big global debate on tariffs, their effects, and who pays for them, creating misconceptions. The broader trade strategy premised on Tariffs reflects a worldview rooted in 19th-century mercantilism, emphasizing protectionism and an aggressive use of tariffs.[1] The misconception that tariffs aren’t taxes stems from several factors. Framing plays a significant role. Tariffs are often described as fees or duties on imported goods, obscuring that they are essentially taxes paid by domestic consumers. Tariffs are taxes levied by one nation on products and services imported from another in order to influence such imports for various purposes including political, revenue amongst others. [2]
The use of tariffs contributes to the misunderstanding. Legal incidence and economic incidence of a tariff are difference. Legal incidence is a decision of the law. Since they’re levied on imports, people may assume they primarily affect foreign entities. However, the cost is often passed down to consumers through increased prices. [3] Furceri and others (2019) find that tariff increases lead, in the medium term, to significant declines in domestic output and productivity, higher unemployment and inequality, real exchange rate appreciation, and minimal effects on the trade balance, with these impacts being more pronounced during economic expansions, in advanced economies, and when tariffs rise rather than fall.[4] Importing businesses adjust to these costs based on the price elasticity of demand for their goods.
If demand is inelastic, they can pass most of the cost to consumers through higher prices without significantly reducing sales. For example, essential goods like prescription medication or fuel tend to have inelastic demand, meaning consumers will continue purchasing them even at higher prices because they have fewer substitutes. if demand is elastic, raising prices could lead to a sharp drop in sales, forcing businesses to absorb more of the cost, thereby reducing their profit margins. This is common with luxury items or non-essential goods like high-end electronics or fashion brands, where consumers can easily switch to substitutes or delay purchases in response to price increases.[5]
Political rhetoric also plays a role in misconceptions about Tariffs. Politicians often present tariffs as beneficial for domestic industries and workers, downplaying the negative consequences for consumers and negative cyclical effects on the general economy. This rhetoric creates confusion about who ultimately bears the burden.[6] The complexity of tariffs’ economic effects contributes to the misconception. Factors like exchange rates and global trade dynamics make it difficult for many to grasp how tariffs function as taxes and their overall economy. The complex interplay of excise taxes, tariffs, and imports further complicates the issue. Tariffs are taxes on imported goods that ultimately affect domestic consumers through higher prices. [7] While they can generate government revenue and offer some protection to domestic industries, they also lead to economic inefficiencies, including loss of economic growth jobs and harm to consumers. [8] The impact of tariffs extends to various stakeholders, including local governments, businesses, and consumers.
Kenyan sugar tariffs and their role as a tax serve as one example. Because of these tariffs, imported sugar becomes more expensive, increasing the competitiveness of domestically produced sugar. Kenya imposes a 100% ad valorem duty on sugar imports from countries outside the East African Community (EAC) and the Common Market for Eastern and Southern Africa (COMESA). Nonetheless, sugar imports from COMESA and EAC nations are allowed duty-free entry. However, Kenya limits duty-free COMESA sugar imports to 350,000 metric tonnes (MT) as part of a safeguard measure. [9]
What is Kenya’s Tariff Structure?
Kenya’s tariff structure, guided by the East African Community Common External Tariff, operates within the international harmonized product classification system. Customs duties, calculated using the EAC CET, range from 0% to 100%, with an average rate of 25%. However, “sensitive items” listed in Schedule 2 of the EAC CET attract higher rates exceeding 25% to protect local industries. The EAC CET employs a four-band system with rates of 0%, 10%, 25%, and a maximum of 35%. [10]
Under the 2015 Excise Duty Act, excise duties target specific goods like alcohol, tobacco, fuel, and luxury items, varying rates based on their excisable classification. A 16% Value Added Tax applies to imports, calculated on the CIF value plus customs duty and other applicable taxes, increasing the overall import cost. Additional charges include a 3.5% Import Declaration Fee and a 2% Railway Development Levy based on the CIF value, contributing to infrastructure development. The 2023 Finance Act introduced an Export and Investment Promotion Levy on specified imported goods, with either 17.5% or 10% rates.[11] [12]
How Tariffs Affect Economic Outcomes
Erica York, a Policy Economist at the Cato Institute, developed a rationale for how tariffs affect the economy, emphasizing the role of intention and pass-through costs in determining their economic impact. The explanation is summarized below.[13]
“The impact of a tariff depends on whether it is intended to protect domestic industry or raise government revenue. When a country (“Home”) imposes a 25% tariff on imported widgets that originally cost $100, raising their price to $125, the burden of the tariff depends on whether the foreign seller lowers prices. If the foreign seller does not reduce prices, consumers in the home must either continue buying the more expensive imported widget or switch to the domestic alternative, priced at $115. If they switch, no tariff revenue is collected, but domestic producers benefit; if they continue buying, the government collects $25 in tariff revenue. Alternatively, suppose the foreign seller lowers prices to $80. In that case, the final cost with the tariff remains $100, meaning the foreign seller absorbs part of the tariff cost, reducing their profit margins while keeping imports competitive.
Beyond direct pricing effects, tariffs also influence broader economic dynamics. Consumers at Home pay higher prices, reducing their disposable income, while domestic producers may face higher costs if they rely on imported inputs. Foreign sellers may take losses to maintain market access, and fewer imports mean fewer dollars flow abroad, strengthening the home currency and making its exports more expensive, which harms local exporters. Ultimately, the burden of tariffs is distributed among consumers paying higher prices, producers facing higher costs or reduced demand, exporters struggling with currency appreciation, and foreign sellers absorbing part of the costs. If tariffs are too high, they block imports entirely and fail to generate revenue; if they are too low, they provide little protection for domestic industries. Ultimately, tariffs create economic distortions that affect businesses, consumers, and global trade.”
Other Economic Effects
However, the economic incidence of tariffs is largely borne by domestic consumers and businesses through several market mechanisms that distort prices, supply, and competition.
(i) One of the most direct effects of tariffs is an increase in the prices of imported goods, leading to inflationary pressures. Since tariffs function as an additional cost on imports, firms in the domestic market, starting with importers, adjust their pricing strategies to maintain profit margins. This cost is passed through the supply chain to wholesalers, retailers, and consumers. The extent of this inflationary impact depends on the price elasticity of demand for the affected goods. If imported goods are inelastic necessities with few substitutes (e.g., energy and medical supplies), consumers will bear most of the tariff burden, leading to stronger inflationary effects. Conversely, consumers may switch to domestic alternatives if demand is elastic, mitigating price increases.[14]
(ii) Higher tariffs discourage foreign producers from exporting to the tariff-imposing country, leading to a contraction in supply and potential market shortages. A Tariff is a major trade barrier.[15] Reducing import volume creates artificial scarcity, which drives up prices for imported goods and domestic substitutes facing less competition. This effect introduces deadweight loss, where market inefficiencies arise as consumers pay higher prices or forgo consumption altogether. However, the price increase’s magnitude depends on domestic production’s responsiveness. If local producers cannot scale up output quickly, shortages will be more pronounced, exacerbating price hikes.
(iii) Even when tariffs do not directly apply to finished domestic goods, they indirectly raise costs when imported intermediate goods or capital inputs are taxed.[16] This creates uncertainty in the economy.[17] Many industries rely on global supply chains for raw materials and production components, and increased costs at upstream stages propagate through the economy, leading to higher marginal costs of production and, consequently, higher prices for domestically produced goods. However, market competition depends on firms’ ability to pass on these higher costs. In highly competitive sectors, businesses may be forced to absorb some of the tariff burden, squeezing profit margins rather than raising prices.
(iv) Tariffs shield domestic businesses from international competition by raising the relative cost of imported goods, so preventing foreign competitors from entering the market. This reduction in market rivalry can allow domestic producers to exert market power, raising prices or reducing output, leading to allocative inefficiency and declining consumer welfare. Over time, protectionism discourages innovation and productivity growth if domestic firms face weaker incentives to improve efficiency.[18] However, the degree of price manipulation depends on the pre-existing market structure. Suppose the domestic industry already has strong competition. In that case, the price impact will be limited, but if the market is dominated by a few firms, the risk of anti-competitive behaviour is higher.
(v) Tariffs can influence currency markets by reducing the demand for foreign exchange to purchase imports. This lower demand for foreign currency may lead to nominal appreciation of the domestic currency, making foreign goods relatively cheaper and partially offsetting some of the tariff’s price impact.[19] However, the currency response is complex and depends on capital flows, investor confidence, and monetary policy. If tariffs lead to uncertainty about future trade policy, investors may withdraw capital, causing currency depreciation instead of appreciation. A stronger currency makes exports more expensive for foreign buyers, potentially worsening the trade balance. In economies with rigid price settings, currency fluctuations may contribute to imported inflation and distort investment decisions.
Conclusion
Tariffs create economic distortions that impact prices, production, trade, and overall efficiency. While intended to protect domestic industries or generate revenue, they often lead to inefficiencies and unintended costs.
From a welfare economics perspective, tariffs cause deadweight loss by raising prices, reducing consumer surplus, and limiting market choices. Domestic producers may benefit in the short run but face higher input costs if they rely on imports. Tax incidence analysis shows that when demand is inelastic, consumers bear most of the burden, fuelling inflation. Conversely, when demand is elastic, firms absorb more of the cost, squeezing profits and discouraging investment. In international trade, tariffs distort comparative advantage, misallocate resources, and lower total factor productivity (TFP).[20] They can also trigger retaliatory trade policies, leading to negative-sum outcomes. Tariffs influence exchange rates by reducing import demand, and they may strengthen the domestic currency, making exports more expensive and harming exporters. Trade liberalization remains a more effective path to sustainable growth.
References
[1] Rediker, Douglas A. “The Consequences of Trump’s Tariff Threats.” Brookings, December 11, 2024. https://www.brookings.edu/articles/the-consequences-of-trumps-tariff-threats/.
[2] Nevil, Scott. “What Is a Tariff and Why Are They Important?” Investopedia, April 1, 2024. https://www.investopedia.com/terms/t/tariff.asp.
[3] TaxEdu. “Tariffs Are Taxes Too.” Tax Foundation, October 17, 2023. https://taxfoundation.org/taxedu/videos/tariffs-are-taxes/.
[4] Furceri, Davide, Swarnali A. Hannan, Jonathan D. Ostry, and Andrew K. Rose. Macroeconomic consequences of tariffs. No. w25402. National Bureau of Economic Research, 2018. https://www.imf.org/en/Publications/WP/Issues/2019/01/15/Macroeconomic-Consequences-of-Tariffs-46469
[5] Kemboi, Leo Kipkogei. “On Efficiency, Equity, and Optimal Taxation: Reforming Kenya’s Tax System,” September 20, 2024. https://ieakenya.or.ke/?wpdmdl=3486.
[6] Tannenbaum, Carl. “The Truth about Tariffs | Weekly Economic Commentary | Northern Trust.” Northern Trust, July 3, 2024. https://www.northerntrust.com/middle-east/insights-research/2024/weekly-economic-commentary/the-truth-about-tariffs.
[7] See Analysis by Bank of Canada on effects of Trump Tariffs. Bank of Canada. “Evaluating the Potential Impacts of US Tariffs.” Bankofcanada.ca, 2025. https://www.bankofcanada.ca/publications/mpr/mpr-2025-01-29/in-focus-1/.
[8] Hufbauer , Gary Clyde , and Sean Lowry. “US Tire Tariffs: Saving Few Jobs at High Cost.” PIIE, April 2012. https://www.piie.com/publications/policy-briefs/us-tire-tariffs-saving-few-jobs-high-cost.
[9] Snyder, Matthew , and Kennedy Gitonga. “Sugar Annual- Kenya,” April 23, 2024. https://apps.fas.usda.gov/newgainapi/api/Report/DownloadReportByFileName?fileName=Sugar%20Annual_Nairobi_Kenya_KE2024-0002.
[10] EAC. “Tariff Regimes.” Eac.int, 2015. https://www.eac.int/customs/tariff-regimes.
[11] Kenya Revenue Authority. “Key Highlights of the Finance Act 2023 – KRA.” www.kra.go.ke, 2024. https://www.kra.go.ke/popular-links/key-highlights-of-the-finance-act-2023.
[12] Kitimo, Anthony. “Kenya Begins New Railway Levy Implementation.” The EastAfrican, December 28, 2024. https://www.theeastafrican.co.ke/tea/business-tech/kenya-begins-new-railway-levy-implementation-4871816.
[13] York, Erica. “Separating Tariff Facts from Tariff Fictions.” Cato.org, 2024. https://www.cato.org/publications/separating-tariff-facts-tariff-fictions.
[14] Comin, Diego, and Robert Johnson. “Tariffs Are Coming: How Trade Dynamics Will Shape Aggregate Demand and Inflation.” CEPR, January 25, 2025. https://cepr.org/voxeu/columns/tariffs-are-coming-how-trade-dynamics-will-shape-aggregate-demand-and-inflation.
[15] Radcliffe, Brent. “The Basics of Tariffs and Trade Barriers.” Investopedia, June 26, 2024. https://www.investopedia.com/articles/economics/08/tariff-trade-barrier-basics.asp.
[16] York Erica. “Tariffs Targeting Intermediate Goods Go into Effect | Tax Foundation.” Tax Foundation, July 6, 2018. https://taxfoundation.org/blog/tariffs-targeting-intermediate-goods-go-effect/.
[17] Edelberg, Wendy, and Maurice Obstfeld. “Tariffs on All Imports Would Create Chaos for Business.” PIIE, October 7, 2024. https://www.piie.com/blogs/realtime-economics/2024/tariffs-all-imports-would-create-chaos-business.
[18] Irwin, Douglas A. “Introduction to” Clashing over Commerce: A History of US Trade Policy”.” In Clashing over Commerce: A History of US Trade Policy, pp. 1-27. University of Chicago Press, 2017. https://www.nber.org/system/files/chapters/c13850/c13850.pdf
[19] Haw, Jared. “Understanding the Impact of Tariffs on Exchange Rates and Production Costs.” epower-corp, November 17, 2024. https://www.epowercorp.com/single-post/understanding-the-impact-of-tariffs-on-exchange-rates-and-production-costs.
[20] Zymek, Robert. “Back to Basics: Total Factor Productivity.” IMF, September 3, 2024. https://www.imf.org/en/Publications/fandd/issues/2024/09/back-to-basics-total-factor-productivity-robert-zymek.
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Why Policies Limiting Early Access to Retirement Savings are Misguided
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Maisha Namba refers to the unique personal identification number assigned to every Kenyan citizen upon registration, usually at birth. This number serves as a lifelong personal identity number. In this study by the IEA Kenya, the author examined the proposed implementation of a unique personal identifier system in Kenya and compared that to India’s Aadhar […]
Newly Proposed State Corporation Reforms: A Necessary Fix or another False Start?
The 2025 Cabinet-approved State Corporation Reforms Plan has detailed comprehensive changes in the structure and governance of state-owned enterprises (SOEs) in Kenya. The plan, which involves mergers, dissolutions, restructuring, and declassification of various entities, is framed as a necessary intervention to enhance efficiency and alleviate fiscal pressures. However, beyond the technicalities, it raises significant legal […]
Law and Economics of Occupational Licensing: The Case of Law Profession
Occupational licensing is widespread in Kenya, particularly in professions such as law and medicine, and it sparks debate in law and economics. In Kenya, occupational licensing is provided for through a set of statutes. This has implications for markets of legal service provision, which we discuss in this blog. Why is occupational licensing now a […]
Mr. Trump and Kenya’s Macro
It has always been difficult to tie Mr. Trump’s statements to his subsequent policy actions. That fact qualifies any certainty in discerning his implications for Kenya’s macro now. But in three areas, the Kenyan macroeconomic authorities should be on high alert. The Kenya Shilling For much of 2024, the Central Bank of Kenya (CBK)has been […]