Charles Njagua Kanyi said in a video that Tanzanian and Ugandan traders were taking Kenyan business and "enough is enough".
A diplomatic row erupted and Tanzania's prime minister summoned the Kenyan high commissioner for an explanation.
Kenya is East Africa's economic hub, attracting people from across the region to move there to make money.
Mr Kanyi was recorded saying the comment in a video widely shared on social media.
"When you look at our market, Tanzanians and Ugandans have taken our business, enough is enough, if we will give them 24 hours and they will not leave, we will beat them and we are not scared of anyone," he can be seen saying as people around him cheer in agreement.
The MP from the ruling Jubilee Party, who is also a singer by the stage name Jaguar, then repeats the phrase "enough is enough" as people applaud.
He has since said on Twitter that his comments had been misinterpreted and "all foreigners are welcome to our country":
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