Japhet Ruto, a journalist at TUKO.co.ke, has over eight years of experience in finance, business, and technology, providing in-depth analysis of economic trends in Kenya and globally.

Tanzania has imposed new protectionist taxes on meat, dairy, eggs, and confectioneries such as biscuits, disrupting the East African Community (EAC) Customs Union's rule and cutting earnings for traders and manufacturers.

The tariff barriers pose a threat to the two nations' diplomatic relations, which had begun to warm up in recent months.

Kenyan manufacturers noted the "discriminatory taxes" imposed by Dodoma authorities were responsible for the KSh 4.2 billion decline in export revenues from items shipped to Tanzania last year.

This was the first decline in eight years, except for the 2020 COVID-19 pandemic era.

Business Daily reported that a sugar levy of TSh 1,000 (KSh 48.74 at the current exchange rate) per kilogramme is levied by Tanzania on confectionaries manufactured in Kenya, including chocolates, cookies, and candies.

Locally produced goods are exempt from this tax.

Dairy items made in Kenya, including yoghurt, ice cream, cheese, and butter, are subject to a TSh 1,000 (KSh 48.74) levy per kilogramme or litre, which is around 19 times higher than the TSh 50 (KSh 2.44) charged for comparable domestically produced goods.

The Kenya Association of Manufacturers (KAM) revealed that Tanzanian officials imposed a 25% excise tax on hatching egg shipments to Kenya, which goes against the EAC Customs Union's rules.

"Tanzania levied discriminatory tariffs on items such sausages, dairy goods, and confections. This indicates that the prices for Kenyan goods are higher than those for Tanzanian citizens," KAM disclosed.

Geopolitical economist Aly-Khan Satchu explained that Tanzania took a tough, no-nonsense stance against Kenya by targeting the agricultural or "farm" sector.

He noted the move was meant to shield its agricultural industry from the Kenyan competition.

Tanzania is evidently prepared to play hardball with Kenya and evidently has selected the “farm economy” for this arena. I can only imagine that Tanzania is taking an aggressive protectionist approach because its domestic farm constituency is well-organised and unhappy with Kenya's competition," Satchu told TUKO.co.ke.

The EAC Customs Union Protocol, which was signed in 2005, made the trading bloc a free trade area with a common external tariff on imports and no duties on domestic goods and services.

It permits the free movement of money, labour, goods, and services.

However, trade obstacles have returned, which has reduced profits for traders transporting products to Tanzania at a time when the Kenyan shilling has appreciated against regional currencies.

According to data by the Kenya National Bureau of Statistics, trade exports to Tanzania decreased by 7.36% from KSh 55.96 billion in 2023 to KSh 51.84 billion in 2024.

Earlier, reported that manufacturers in Kenya threatened to move to Tanzania over high taxes.

KAM chief operating officer (COO) Tobias Alando said it would be cheaper for them to produce and sell in Uganda and Tanzania compared to Kenya.

Members of the KAM who operate in the steel and cement industries issued collapse warnings, while some threatened to relocate.

Source: TUKO.co.ke