Jordan caught under Trump tariffs’ sword of Damocles

May 5, 2025, 3:58 PM

US President Donald Trump greets King of Jordan, Abdullah II Ibn Al-Hussein at a visit this February. Jordan are facing significant economic headwinds from potential new tariffs

Jordan economy export reliant
US key trading partner
Rethink of export strategy

The Middle East and North Africa is expected largely to avoid the direct impact of President Donald Trump’s new tariffs, with the possible exception of Jordan.

The spectre of a 20 percent US tariff taking effect in July is “difficult to ignore,” according to Racha Helwa, a senior economist and director of the empowerME Initiative at the Atlantic Council’s Rafik Hariri Center for the Middle East.

“For a small, export-reliant economy like Jordan’s, where the United States is among its top trading partners, the shock runs deep,” Helwa told AGBI.

The International Monetary Fund said last week that, having already struggled through the implications of Israel’s war in Gaza, Jordan is facing new economic challenges as Washington cuts foreign aid and amid “heightened trade uncertainty due to its exposure of exports to the US market”.

Jordan is the country in Mena most dependent on selling non-oil goods to American consumers, according to the IMF’s latest Regional Economic Outlook. Such exports comprise 5.6 percent of its gross domestic product, ahead of Bahrain at 3.3 percent of GDP – all other regional economies sit below 1 percent of GDP.

“Jordan’s export base is concentrated in labour-intensive sectors such as garments, textiles, and industrial goods – areas that directly employ tens of thousands of Jordanians, especially women,” Helwa said.

She cited “early estimates” that, if it ultimately goes into full force, the 20 percent tariff could crush Jordanian export volumes by upward of 30 percent, and cause the loss of 10,000 to 15,000 jobs in the clothing sector, where women comprise a majority of workers.

As it is, Jordan has one of the world’s lowest proportions of women with jobs at 14 percent, according to International Labour Organization data. The total unemployment rate was 21 percent at the end of last year.

While the country has had a free trade deal with the US since 2001, pegs its currency to the dollar and sends nearly 25 percent of its exports to America, Trump hit it with the 20 percent “reciprocal” tariff on April 2nd.

Iraq, Algeria and Tunisia face the prospect of even higher rates of 39, 30 and 28 percent, respectively, but their exports to America are either of marginal value or largely comprise exempt energy products.

Trump has since paused the individual country-by-country levies for 90 days, bringing nearly all nations down to a universal 10 percent baseline.

“Reducing the tariff rate to 10 percent buys Jordanian exporters some time – but it does not remove the sword hanging over their heads,” says Helwa.

The IMF still predicts a “modest recovery” in growth in Jordan this year and next at 2.6 and 2.9 percent, respectively. This, however, represents a downward revision of 0.3 percent for 2025 and 0.1 percent for 2026 from the fund’s forecast from October 2024.

If upheld, the new Trump tariffs could force Jordan to rethink the structure of its export industries to make itself more resilient to “abrupt and sudden changes” of this kind, according to Ibrahim Saif, a former Jordanian government minister.

This would involve shifting the mix and diversifying the destinations of the goods it manufactures, and it would take time and a “huge” effort domestically.

“However, in the short term for a small country like Jordan with the kind of a composition of exports that we’re sending to the US – which is basically jewellery, textile, and some pharmaceutical products – it will be difficult to immediately adapt to or change,” Saif said.

Last year, US-Jordanian trade in goods amounted to $5.4 billion, according to the Office of the US Trade Representative. American exports to the North African nation grew nearly 40 percent year on year while imports rose 15 percent over 2023.

The US had a $1.3 billion bilateral trade deficit in 2024, 2.3 percent smaller than the previous year.

In any case, Saif thinks it is too early to panic, as Trump’s reciprocal tariff matrix may still change significantly. US officials have said negotiations are ongoing with many trading partners.

What levies the US president ultimately imposes on competitors will also matter, as higher tariffs on other textile exporters such as Vietnam or Bangladesh – currently slated for whopping 46 and 37 percent rates respectively – may create opportunities for Jordanian manufacturers, Saif said.

“I have spoken to some of the producers in this industry and they were still waiting and weighing their options, and also looking at what would happen to other countries that are primarily exporting to the US,” he noted.