By The Highflyer Report
A fresh trade row is brewing in East Africa after Tanzania’s largest ceramics manufacturer joined a growing list of companies opposing Kenya’s proposal to impose a 35% excise duty on selected imports from East African Community (EAC) partner states, warning the move could undermine regional integration and raise construction costs.
Dar es Salaam-based Keda Tanzania Ceramics Company Limited has formally objected to Kenya’s Finance Bill 2026 proposal, which seeks to remove tax exemptions currently enjoyed by EAC-origin ceramic products and instead subject them to a 35% excise duty.
The company argues the measure would make Tanzanian ceramic tiles significantly more expensive in Kenya, one of its key export markets, while violating the EAC Customs Union’s principle of free movement of goods.
The latest protest comes barely two months after Tanzania’s glass manufacturer, Kioo Limited, raised similar concerns over the proposed tax on imported glass bottles. Kioo warned that the levy would add an estimated US$7.7 million in annual costs on exports worth about US$22 million, threatening both regional manufacturers and Kenyan consumers.
The company exports around 40,000 metric tonnes of glass bottles to Kenya each year, accounting for approximately 32% of its export volumes.
The dispute is particularly significant given the scale of trade between the two neighbouring economies. Kenya and Tanzania traded goods worth US$860.3 million in 2025, representing nearly 40% of all intra-EAC trade, making them the bloc’s largest bilateral trading partners.
Just weeks before the tax proposal emerged, Presidents William Ruto and Samia Suluhu Hassan had pledged to eliminate all remaining non-tariff barriers by June 30, 2026, in an effort to push bilateral trade beyond US$1 billion.
Kenya says the proposed excise duty is intended to strengthen domestic manufacturing, create jobs and protect local industries from rising imports. However, manufacturers across the region argue the policy amounts to a discriminatory trade barrier that could trigger retaliatory measures from neighbouring countries.
Trade analysts warn that the proposal could affect more than 20 categories of manufactured goods, including ceramics, glass, plastics, furniture, paper products and printing materials, disrupting regional supply chains that have been built over two decades under the EAC Customs Union.
For East African manufacturers, the outcome could determine whether the region continues on its path toward deeper economic integration or slips into a new era of protectionist trade policies that weaken one of Africa’s most ambitious common markets.
Business groups have warned that such measures contradict the spirit of the EAC Customs Union, which seeks to promote the free movement of goods across the region.
Industry stakeholders argue that the proposed taxes amount to non-tariff barriers that could discourage regional manufacturing and investment. They say companies have made significant investments under the assumption that EAC markets would remain accessible without discriminatory domestic taxes.
Kenya, however, maintains that the proposed measures are intended to protect local manufacturers from increasing competition and support domestic industrial growth.
Officials argue that strengthening local production is essential for job creation, value addition, and reducing dependence on imports.
Trade experts caution that the dispute could heighten tensions between Kenya and its regional trading partners if a negotiated solution is not reached.
The EAC has previously encouraged member states to resolve trade disagreements through dialogue rather than unilateral policy actions that could disrupt regional commerce.
Kenya remains one of Tanzania’s largest export destinations, with trade between the two countries spanning construction materials, manufactured goods, agricultural products, and consumer items.
Any restrictions affecting these sectors could have broader implications for regional supply chains and investment confidence.
Business associations across East Africa are now urging the EAC Secretariat to engage member states to ensure national industrial policies remain consistent with regional trade commitments.
Regional trade experts say preserving predictable market access will be critical to sustaining the bloc’s ambitions of deeper economic integration, increased intra-African trade, and a stronger regional manufacturing base.