Me and my friend fight alot, and he always does the noob clap (contract pecs and set grabby hands) and he does a kick that comes from the side. How can I counter this? On the second turn my arms are grabbed and hes doing a powerful kick?

Easy gow low very low like contract knees and legs bring you arms out and extend elbowws and grab him then when you grab him lower your sloulders and when your at the right sport extend knees

Well, its kind of your job to figure it out but here:

Think, "Grabby" hands can stop a moving limb, that limb is his knee.
Once you stopped his Kick, its a go with the flow match, try fracturing his parts for more points, keep balancing yourself and don't let your character fall.

Once you have free time, try practicing the mod in Free Play, It has a hidden effect.

If you are talking about a lift kick in aikido, I find the best way to counter it is to jump out to the edge of the dojo as high as you can. Then try to pull them under you before you hit the ground. Though this does get hard if they are grabbing you with both hands.