East African Community Faces Trade Deficit Amid Global Economic Shifts
The East African Community (EAC) has once again found itself in a trade deficit, marking a reversal from its brief period as a net exporter at the start of 2025. This downturn is attributed to a significant decline in exports to key markets such as China, India, and the United States, which have traditionally been major buyers of EAC goods.
In the quarter ending June 2025, the bloc’s trade balance worsened by 334 percent, moving from a historic surplus of $416.5 million in the previous quarter to a deficit of $974.7 million. This shift highlights a return to a long-standing trend that the EAC has struggled to overcome.
According to the latest data from the EAC Secretariat, the drop in exports was primarily driven by reduced demand from some of the region’s largest trading partners. China, the EAC’s leading buyer, saw a notable decrease in imports, as did other key markets such as India, Indonesia, the US, Switzerland, and Vietnam.
This decline coincided with rising global trade tensions, particularly in the US, where looming tariffs and geopolitical conflicts in the Middle East have disrupted supply chains. These factors have had a negative impact on African exporters, including those within the EAC.
The United Nations Trade and Development (UNCTAD) highlighted these challenges in its Global Trade Update for the period, noting that trade wars among major economies are affecting their commercial relationships with developing countries. “Geoeconomic factors continue to play a significant role in shaping key bilateral trade patterns,” the report stated. “These dynamics have had a substantial impact on trade between major economies and on their relationships with other partners.”
Despite a modest overall increase in exports, the region experienced a sharp decline in shipments to at least ten of its top trade partners. China, which typically accounts for about 30% of the EAC’s total merchandise exports, saw a drop in imports to $5.73 billion from $5.89 billion in the previous quarter. This decline was partly due to slower import growth in China amid ongoing tensions with the United States.
The US also reduced its purchases from the EAC, with exports declining by 10%, or $26.8 million, to $233.8 million from $260.6 million in the first quarter. The Trump administration’s sweeping tariffs contributed to this drop.
India, previously the fourth-largest export destination for the EAC, saw a more dramatic reduction in imports, cutting them by over half to $171.8 million, down from $375.7 million in March. Other markets, including Switzerland, Mozambique, Vietnam, Indonesia, the United Kingdom, Zambia, and Pakistan, also experienced significant declines in imports, further undermining export growth.
Imports into the EAC, however, continued to rise sharply. According to EAC data, the sharpest drop in exports came from agricultural and food products, including cocoa, cereals, trees, and other plants, which are among the region’s primary export categories.
Overall, the EAC’s exports increased by a modest 3% to $18.6 billion, up from $17.9 billion in the previous quarter. However, imports surged by 11% to $19.6 billion from $17.58 billion. All major import sources except Russia, Saudi Arabia, and Malaysia recorded growth in shipments to the region.
Some of the most significant increases in imports came from Australia (198%), Oman (196%), Zambia (165%), Belgium (153%), Ghana (76%), France (42%), and the United Kingdom (42%).
Experts had previously linked the first-quarter export surge — which led to the rare surplus — to possible “panic selling” ahead of anticipated tariff disruptions. “It could be that some exports were brought forward ahead of the tariff impositions,” said Phyllis Papadavid, an economist from the Overseas Development Institute.
Bernard Wabukala, a lecturer at Makerere University, had predicted that the surplus could be sustained in the medium term, provided favorable weather supported increased agricultural production.