Ugandan exporters are now facing a major hurdle as the United States enforces a 10% base tariff on all goods from Uganda. This move, aimed at addressing trade imbalances, has raised concerns among Ugandan businesses and economic analysts.
US Cites Trade Deficits as Key Reason
The US government has framed the tariff as part of a broader strategy to correct global trade deficits. Officials have also warned that any retaliatory tariffs from trading partners could prompt further increases in US import duties.
Uganda currently levies a 20% import duty on most US goods, adding another layer of complexity to the trade relationship.
Uganda’s Trade Surplus with the US
According to the United States Trade Representative, total trade between Uganda and the US reached $238.9 million (Shs871 billion) in 2024.
Uganda exported $132.6 million (Shs483 billion) worth of goods to the US while importing $106.3 million (Shs387 billion), giving Uganda a trade surplus.
Rising Costs for Ugandan Goods in the US Market
Muhammed Moses Ssempijja, a tax partner at Ernst & Young Uganda, warns that the tariff will make Ugandan products more expensive for American buyers.
“The cost of Ugandan goods in the US market is expected to rise by about 34%, reducing demand and export volumes,” he explained.
Broader Economic Implications
Economist Dr. Fred Muhumuza sees the tariff as a potential disruptor for Uganda and global trade. He highlights that US tariffs on China could indirectly impact Uganda, as increased costs on Chinese exports may translate to pricier imports for Uganda.
Additionally, Dr. Muhumuza predicts macroeconomic consequences, including possible inflation in the US. If American interest rates rise, investors may move capital back to the US, reducing the flow of dollars into Uganda.
This could pressure Uganda’s central bank to adjust its own interest rates to stabilize the economy.
US-Uganda Trade Relations Under Strain
The tariff comes after the US removed Uganda from the African Growth and Opportunity Act (AGOA) in 2023.
AGOA had allowed duty-free access for Ugandan exports, but Uganda was removed over human rights concerns, particularly the enactment of the Anti-Homosexuality Act and post-election abuses.
What’s Next for Uganda’s Export Sector?
Ugandan businesses and policymakers now face tough choices. The government must reassess trade policies, explore alternative markets, and devise strategies to mitigate losses.
With these new barriers in place, Uganda’s trade relations with the US enter a more challenging phase.
