Tanzania spent much of last year congratulating itself for no longer needing to import steel. Nineteen mills, led by Lodhia Industries' $100 million in Mkuranga, pushed domestic capacity to 1.2 million tonnes against consumption of 600,000.
The government's response was targeted: the Finance Act 2025 pushed import duty on cement, bars, rods and flat rolled steel products from 10 percent to 35 percent, the top protective band the EAC's common external tariff allows for extra sensitive finished goods, and stacked a new industrial development levy on top.
Eight months later, the Prime Minister followed with a directive stripping tax incentives from any imported good already produced at home. It was, by most measures, a legitimate infant industry policy, given a tariff wall to mature behind before competing on price against subsidised foreign steel.
Tanzania's obligations under the WTO and the EAC customs union were not seriously tested by it. The 35 percent band exists precisely for this purpose.
A tariff assumes the threat will keep arriving as cargo, but in fact it is starting to arrive as factories instead.
China's own steel industry is sitting on roughly 640 million tonnes of excess capacity, according to the OECD's 2026 Steel Outlook, a figure the organisation expects to climb past 700 million by 2028.
Domestic Chinese demand has weakened as its property sector cools, and Chinese producers have responded by exporting more, 131 million tonnes in 2025, nearly double the 2020 figure, while simultaneously investing directly in production abroad.
Rising anti-dumping actions and safeguard measures in other markets are part of why: building the plant inside the destination country sidesteps a tariff aimed at the border.
Cross border investment now accounts for roughly a fifth of all planned new steelmaking capacity worldwide, more than half of it Chinese linked, and the OECD names East Africa specifically as an emerging destination.
This week's visit by a deputy minister to two Chinese steel and textile manufacturers in Tanga was not a coincidence. It was Tanzania positioning itself to receive exactly this shift.
That distinction, trade versus investment, changes the policy question entirely. A 35 percent duty protects Lodhia and its eighteen peers from underpriced foreign cargo.
It does nothing to protect them from a Chinese owned plant built inside Tanzania's own borders, employing Tanzanians, paying Tanzanian tax, and competing for the same domestic market with capital and technology the local industry cannot yet match.
Roughly 86 percent of China's cross border steel investment goes into blast furnace capacity, an older, higher emissions technology than the electric arc alternative, a detail that should concern a country now building its carbon monitoring and Article 6 credentials as much as its industrial ones.
Courting this capital without conditions on technology, local content, and emissions standards risks trading self sufficiency for a more capital intensive form of dependency.
The textile side of the pitch exposes a different weakness: not overprotection, but underuse.
Tanzania has held AGOA eligibility for duty free apparel access to the US since 2002 and exports a fraction of what Kenya sends under the same programme, choosing instead to sell raw cotton abroad, including more than $120 million to Pakistan alone last year, rather than spin it into thread and cloth at home.
The EAC's common external tariff structure, which taxes finished goods more heavily than raw inputs, was designed to push exactly this kind of value addition. It has not, because the constraint was never tariffs.
Amne Suedi is the MD of Shikana Investment and Advisory, Honorary Consul of Switzerland in Zanzibar, and Chair of the Switzerland-Tanzania Chamber of Commerce.
