United States Sees Ethiopia’s Open Door with a Stubborn Lock

May 17 , 2026. By BEZAWIT HULUAGER ( FORTUNE STAFF WRITER )

Two-way goods trade between the United States and Ethiopia reached an estimated 2.5 billion dollars last year, making Ethiopia the 75th-largest market for American exports. U.S. exports grew by 41.2pc to 1.4 billion dollars, while imports from Ethiopia doubled to one billion dollars. According to the U.S. Trade Representative, while macroeconomic overhauls initiated in July 2024 have increased foreign currency predictability, long-term regulatory certainty remains a rare commodity for international firms.

Ethiopia’s trade with the United States has become a revealing test of the Administration's economic reform drive.

The market is opening, but rules of entry and competition remain uneven, leaving Washington to welcome change while warning that predictability is a rare commodity.

A recent report from the United States Trade Representative (USTR) office on trade barriers found that two-way goods trade reached an estimated 2.5 billion dollars last year, making Ethiopia the 75th-largest market for American goods exports. U.S. exports grew by 41.2pc to 1.4 billion dollars, while imports from Ethiopia more than doubled to one billion dollars.

The American goods surplus narrowed 25.5pc to 410.9 million dollars. In services, the imbalance moved the other way, with the U.S. deficit widening to 1.1 billion dollars in 2024 after services imports from Ethiopia surged to 1.9 billion dollars. The report’s findings are less about volume than rules. It credits Ethiopia's leaders with progress in financial-sector liberalisation, logistics reform, and greater predictability of the foreign exchange rate.

“Access to foreign currency has improved since macroeconomic reforms began in July 2024, making import financing and profit repatriation more predictable,” the report said.

A law introduced last year permits foreign banks to establish subsidiaries, open branches, acquire equity stakes, or set up representative offices, subject to approval by the National Bank of Ethiopia (NBE). But foreign ownership in domestic banks is capped at 49pc, making it mandatory for foreign banks to include Ethiopian citizens on boards, while foreign nationals are limited to one seat. All trade financing should still pass through domestic banks, complicating investors with accounts abroad.

The report portrays an economy still shaped by permits, public-sector monopolies, shifting customs practices, and tight foreign-exchange controls.

Lack of predictability is the core misgiving that Americans have about Ethiopia, a country that is yet to become a full member of the World Trade Organisation (WTO). It has no bound tariff rates, while its average most-favoured-nation applied tariff was 15.6pc in 2023, including 20.5pc for agricultural goods and 13.9pc for non-agricultural products.

The accession process to the WTO has stretched for more than two decades. But Kassahun Gofe (PhD), a Trade Minister and chief trade negotiator, believes the country has made more progress in the past year than in the previous two decades combined. His team of negotiators, including Eyob Tekalegn (PhD), governor of the Central Bank, and Zeleke Temesgen (PhD), Investment Commissioner, targeted membership this year, leaving seven months to close negotiations. The dossier has become a 400-page draft Working Party Report with 769 articles tied to 419 legal frameworks.

According to Kassahun, Ethiopia has cleared technical issues, including customs valuation, the elimination of other duties and charges upon membership, and directives for Franco Valuta payments. Countries in bilateral negotiations have dropped from 22 to 17, and Ethiopia has finalised market-access agreements with nine countries. He argued WTO membership would give Ethiopian exports reciprocal treatment and move the economy toward a rules-based trading system.

"Consumers could benefit from lower prices on edible oil and sugar as barriers decline," he said. "Negotiators are proceeding with knowledge and wisdom to safeguard our national interests."

Mered B. Firkeremariyam of Pragma Investment Advisors, concurred. WTO accession could provide a platform for trade rights and tariff coordination. He warns that domestic industries may face cheaper imports, but Ethiopia still has room to negotiate carefully calibrated protections instead of closing markets outright.

Washington’s assessment is more guarded, however.

Import licensing has moved online under the Ministry of Trade & Regional Integration (MoTRI), but the USTR blames poor internet connectivity that weakens the system. According to the Trade Representative, Ethiopia applies a 15pc VAT on most U.S. imports and criticised the June 2024 decision to reimpose VAT on sugar and edible oil after earlier tax and tariff suspensions meant to contain inflation. Import restrictions remain another point of contention. Ethiopia is working to lift its ban on used or refurbished medical equipment intended for resale, but plans to replace it with high tariffs.

Although Finance Ministry officials relaxed restrictions on some of the 38 product categories banned in 2022, they renewed a ban on new and used internal-combustion vehicles in July 2024. They expanded it in October 2025 to all diesel-powered heavy vehicles. The rules favour electric and hybrid vehicles while granting duty-free treatment for gas-powered trucks.

American companies often complain that the Customs Commission changes regulations without notice, stranding goods at ports.

Investment liberalisation is similarly bound. The 2020 investment law allows foreign participation in sectors not reserved for domestic investors, but insurance, microfinance, electricity transmission and distribution remain closed. Foreign nationals may enter freight forwarding, shipping, domestic air transport, advertising, audiovisual services, accounting and auditing only as minority partners. Fertiliser and petroleum import trade, as well as wholesale fertiliser distribution, remain barred.

State-owned enterprises dominate telecommunications, power, banking, insurance, air transport, agricultural processing, industrial parks and shipping.

“These firms benefit from faster customs clearance, priority access to finance and foreign exchange from the Commercial Bank of Ethiopia, preferential treatment in tenders and land acquisition, and marketing support,” the report stated.

The Trade Representative sees logistics as a costly bottleneck, where transport costs account for an estimated 22pc to 27pc of retail prices, while shipping and freight expenses are roughly 60pc higher than in neighbouring countries. Ethiopia has also offered eight state-owned sugar enterprises and a 45pc stake in Ethio telecom to foreign bidders, though a 2024 public offering of 10pc of Ethio telecom shares to Ethiopian investors sold only a tenth of the shares offered.

“But imports, exports and outgoing foreign payments must still be processed through licensed commercial banks,” said the report.

Exporters may retain 50pc of foreign-currency earnings, while the rest should be converted into Birr. A February 2026 directive eased capital controls, allowing market-based foreign-exchange operations and repatriation with fewer procedural barriers.

According to the report, Ethiopians and foreign businesses “routinely encounter” corruption in tax collection, customs clearance and land administration. Some American firms reported repeated requests for bribes to secure contracts. Others said they were disproportionately targeted in tax assessments and presented with questionable liabilities. However, the report noted that the Anti-Corruption Directorate under the Ministry of Justice prosecuted 186 cases between June 2023 and June 2024, securing 164 convictions.

American Trade officials blame the parallel-market premium between formal and informal rates, and a 2.5pc foreign-exchange transaction fee. They welcomed steps that allow selected foreign direct investors to open offshore accounts for external debt service, insurance and warranty claims, contracts, and other foreign-currency expenses. Recent reforms introduced forward exchange transactions without prior Central Bank approval.

"Still, routing trade finance through local banks remains a significant constraint," stated the report.

However, Washington still believes the Administration’s approach is clear and deserves its support in furthering the reform agenda, but with expectations of equal treatment rather than preferential advantages for state-enterprises. U.S. firms are exploring multimodal transport, freight forwarding, and supply chain services.

According to American officials, the Trump Administration remains committed to supporting American firms entering Ethiopia’s logistics sector, with expectations that increased participation will gradually reduce transport costs and benefit both Ethiopian and American businesses. The Administration’s broader trade approach continues to emphasise reciprocity and the removal of non-tariff barriers. Its officials disclosed that they are working with Ethiopian counterparts to demonstrate how permitting direct use of foreign accounts for trade would improve investment inflows, expand trade volumes, and support broader economic growth.

This remains an active area of engagement. The requirement that all trade financing pass through Ethiopian banks is still viewed as a significant constraint.

Mered believes Ethiopia’s rules reflect deliberate choices, including a cap on foreign participation in banking and majority-ownership rules meant to protect domestic interests. Such safeguards resemble approaches used in countries like China, but lasting progress depends on a more competitive banking sector. Mered estimated that the economy needs up to seven trillion Birr in annual financing, more than what current institutions can supply.

"The CBE should compete beyond domestic markets, while private banks drive innovation at home," said Mered.

He criticised foreign-exchange repatriation fees of 2.5pc to four percent, bureaucratic hurdles, customs inconsistency and state dominance in logistics.

PUBLISHED ON May 17,2026 [ VOL 27 , NO 1359]