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Higher costs, competitive exports: UAE, GCC markets to be relatively 'unscathed' by Trump’s tariffs
Trump has declared April 2 as ‘Liberation Day’ as he rolled out sweeping tariffs, a move that could trigger a global trade war and upset the status quo in the markets
The UAE and GCC countries will face some indirect impact in select industries due to the new tariffs that US President Donald Trump rolled out on Wednesday, April 2, but the region will largely remain “unscathed”, according to experts.
The tariffs include 10 per cent to be imposed on the UAE, 10 per cent on Qatar, 20 per cent on Jordan, 10 per cent on Oman, 10 per cent on Bahrain, and 10 per cent on Saudi Arabia. The White House said that the new tariffs will come into effect on April 5, with the higher rates for some countries to be enforced starting April 9.
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“The UAE and GCC, as oil-heavy economies with limited direct trade exposure to the US in comparison to Canada, Mexico, or China, will likely face indirect rather than immediate impacts from Trump’s tariffs,” said Nayeem Aslam, Chief Investment Officer, Zaye Capital. “Globally, these tariffs — hitting steel, aluminum, cars, and all Chinese goods — could slow trade flows, raise commodity prices, and disrupt supply chains.”
However, others pointed out that the region will be largely shielded from the brunt of the fallout these new tariffs could cause. “The GCC region, particularly the UAE, are likely to emerge relatively unscathed as America recorded a trade surplus with all six GCC nations in 2024,” said Vijay Valecha, chief investment officer at Century Financial.
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“Tariffs are largely directed at countries where the US faces significant trade deficits, including Canada, Mexico, Japan, South Korea, the EU, and China, whose competitively priced exports challenge domestic manufacturers.”
Trump has declared April 2 as ‘Liberation Day’ as he rolled out sweeping tariffs, a move that could trigger a global trade war and upset the status quo in the markets. The details of the tariffs remain unclear but many foreign countries have promised retaliatory levies on goods.
Impacted industries
According to Hamza Dweik, Head of Trading and Pricing in MENA at Saxo Bank, the new taxes could impact several industries in the region. “Industries reliant on imported goods, such as electronics and automobiles, could see price increases due to higher costs from affected countries,” he said.
“Construction and real estate industries might face increased costs for imported materials like steel and aluminum, which are often subject to tariffs. Goods imported from countries directly affected by the new taxes may become pricier, impacting consumer spending and potentially leading to inflationary pressures.”
Nayeem added that the automotive sector could also “feel the pinch” due to the new levies. “Cars from tariff-hit countries like 25 per cent on Canadian and Mexican models might jump approximately Dh7,000 to Dh9,000 per unit,” he said. “Chinese electronics and textiles, already taxed at 20 per cent, will get pricier. For example, iPhones would go up by Dh150 to Dh300. The cost of food imports like US grains might also creep up if retaliatory tariffs escalate.”
As per Lale Akoner, the Global Markets Analyst at eToro, the services sector will be largely unaffected by tariffs and may provide a safer investment opportunity in the current climate.
Benefits
Vijay noted that these new tariffs could even benefit the UAE. “The additional costs often compel exporters to reroute trade through alternative markets, potentially boosting demand for transshipment hubs like Dubai's Jebel Ali,” he said.
“This can temporarily bump prices and handling times. Any disruptions to supply chains can boost demand for value-added logistics services in the GCC. However, rerouting trade creates operational challenges, such as longer routes, extra handling, and port congestion, which raise costs. Despite these uncertainties, opportunities exist for GCC logistics providers to navigate the evolving landscape.”
Another expert, Zainab Yasmeen, founder of HR helpdesk, said: “As a re-export hub, the UAE could use free zones to minimise the impact of tariffs by facilitating trade with other regions,” she said. “Tariffs would create short-term economic disruptions, but given their financial strength and diversification strategies, countries like Saudi Arabia and the UAE will likely adapt by strengthening trade ties with alternative partners. However, US companies operating in these countries might also face challenges due to retaliatory policies.”
Nayeem added that the UAE’s gold trade could boom as a hedge if tariff wars spark economic uncertainty. “The GCC could pivot to BRICS partners like China and India for trade stability, reducing reliance on tariff-war players,” he said.
Nasreen Abdulla
Nasreen Abdulla is a Special Correspondent covering food, tech and human interest stories. When not challenged by deadlines, you’ll find her pulling off submissions on the jiu jitsu mats.
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