By Peter Nyanje
Tabling the national budget for the 2025/26 financial year on June 12 in Parliament, Finance Minister Dr. Mwigulu Nchemba announced a significant last-minute revision: a TSh500 billion reduction in proposed government spending.
Dr. Nchemba told lawmakers in Dodoma that the adjustment came after a reassessment of anticipated revenue, particularly in light of recent global developments – most notably, changes in US trade policy under President Donald Trump.
“Following new trade measures announced by the United States, which are likely to disrupt our export earnings and customs revenue, the government has decided to revise its expenditure projections accordingly,” said Dr. Nchemba.
The concerns stem from President Trump’s decision to reinstate “reciprocal” trade tariffs on countries the US deems to have unfair trade advantages.
The 90-day pause on implementing these tariffs expires on July 9, 2025, after which a new round of duties is expected to be rolled out against as many as 180 countries, including developing economies like Tanzania.
Time to think beyond budget cuts
While reducing government spending is a short-term response, analysts warn that Tanzania must develop a longer-term strategy to weather the impending trade disruption.
The potential US tariffs could impact key Tanzanian exports, such as textiles, minerals, and agricultural produce, and threaten preferential access to the American market under initiatives like the African Growth and Opportunity Act (AGOA).
“It’s not enough to trim the budget,” says an economist at the University of Dar es Salaam. “Tanzania needs to rethink its trade positioning, diversify markets, and build stronger economic resilience.”
The upcoming tariffs are part of a broader shift in US trade policy that aims to force countries to import more American goods, remove non-tariff barriers, and reduce dependence on Chinese inputs in products bound for the US market.
While much of the global focus has been on economic heavyweights like China, Canada, and the European Union, the repercussions for emerging economies in East Africa – particularly Tanzania – could be profound.
What’s at stake for Tanzania?
President Trump’s “reciprocal” tariff agenda targets countries that, in the US view, run unfair trade surpluses or impose barriers to American exports.
Under this lens, developing nations that rely heavily on exports to the US but import less in return may face increased duties, particularly on key products like textiles, agricultural goods, and processed minerals.
For Tanzania, whose exports to the US are modest but strategically important – such as horticultural products, raw minerals and apparel under AGOA (African Growth and Opportunity Act) – any additional tariff barriers could erode the country’s competitive advantage.
“This decision could hit Tanzania’s manufacturing and agribusiness sectors hard,” says a trade economist at the University of Dar es Salaam. “It also threatens to upend regional integration plans as countries scramble to adjust their export strategies.”
AGOA in the crosshairs?
Although Trump has not explicitly mentioned AGOA, analysts fear that his sweeping approach to “reciprocity” could disrupt the preferential access that countries like Tanzania enjoy under the arrangement.
While AGOA has spurred light manufacturing, leather processing, and textile exports, even marginal tariff increases would undermine investor confidence in export-processing zones.
“There’s a risk the US could suspend or ‘review’ AGOA eligibility unilaterally under this tariff framework, especially if Tanzania is seen to benefit ‘too much’ without offering US firms more market access in return,” warns a senior official at Tanzania’s Ministry of Industry and Trade.
Critical minerals vs US-China tech battle
The Trump administration is also pushing trading partners to reduce reliance on Chinese inputs in exports destined for the US – part of a broader geopolitical strategy to contain China’s influence.
This has direct implications for Tanzania’s nascent critical minerals sector, particularly with projects in graphite, nickel, and rare earths gaining momentum.
While Tanzania is working to attract Western investment into its critical minerals pipeline – including deals with Australia and the EU – a blanket requirement to audit and remove Chinese-linked supply chains could delay production timelines, raise compliance costs, and force painful strategic realignments.
Regional supply chains under pressure
East Africa’s increasingly interconnected trade environment, anchored by the African Continental Free Trade Area (AfCFTA), is also under threat.
Many companies based in Kenya, Rwanda, or Ethiopia source inputs from Tanzania for final export assembly – or vice versa.
If reciprocal tariffs extend to countries like Kenya, which has a more prominent export relationship with the US, Tanzania may experience indirect trade shocks through cross-border supply chains.
Conversely, exporters might reroute some production to Tanzania to take advantage of potentially softer US scrutiny – if handled diplomatically.
“This could present a short-term opportunity for Tanzania to absorb redirected investment and trade flows,” says Jennifer Mbwambo, an East Africa policy analyst. “But only if the country proactively positions itself as a stable, rules-based alternative.”
What Tanzania should do now
Tanzania’s policymakers must act fast and decisively to protect its trade interests. First, they should diversify export markets beyond the US, especially in Asia. But most importantly, they should think of intra –Africa trade. This will enable the country reduce overreliance on any one trade destination.
They should also accelerate reforms in digital trade and non-tariff barriers to improve US perceptions of “reciprocity” without compromising national interest.
Next step should be to strengthen negotiations within regional blocs like the EAC and SADC to develop a common strategy toward any US pressure. Given the stranth of US, no single country in our region n can face her alone and succeed.
Though it is late but strategies should be put in place to engage with US diplomats and trade representatives to advocate for Tanzania’s development priorities and seek clarity on AGOA’s future, mainly extension of the program.
A new era of trade realignment
The Trump administration’s approach signals a dramatic shift in US trade diplomacy – from multilateralism to transactional bilateralism.
For Tanzania and its East African neighbours, this demands a more agile, strategic and data-driven trade policy.
While Tanzania is not currently among Washington’s top targets, the ripple effects of the coming tariff wave could be just as disruptive – or opportunistic – depending on how prepared the country is. Tanzania must not sit on the sidelines. The future of our export economy could depend on how we respond to this moment.
