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Tariffs and tech on the UAE’s radar as Trump takes office

Donald Trump and President Biden talk in the Oval Office at the White House after Trump's election victory last November Reuters/Kevin Lamarque
Donald Trump and President Biden talk in the Oval Office at the White House after Trump's election victory last November
  • Optimism tempered by worries
  • Tariffs could upend global trade
  • Gulf must navigate US-China rivalry

When billionaire developer Hussain Sajwani appeared on stage with Donald Trump earlier this month to announce $20 billion worth of investment in US data centres, he did not hide his glee about the Republican’s return to the White House.

The chairman of UAE-based Damac Properties called Trump’s re-election in November “amazing news” and said his family had been “waiting four years” to pour money into the US. 

According to sources, Sajwani’s views echo those of stakeholders across the Emirates and the Gulf who appreciate the president’s flair for cut-throat negotiation and transactional deal-making.

They are not especially bothered by the blurry lines separating Trump’s private and public affairs; in fact, they hope the two will come together to benefit the region.   

Along with optimism, however, there is trepidation about the incoming US president’s economic plans, according to Robert Mogielnicki, a senior resident scholar at the Arab Gulf States Institute in Washington.

“There are genuine concerns about how tariffs may impact the global economy, specific trade and investment initiatives in the Gulf, and assets held by Gulf investors,” he tells AGBI.

Trump has pledged to impose a range of levies on imports from around the world, some of them on day one of his administration. While none singles out the UAE or the Gulf, they are expected to make regional products, including in the energy industry, less competitive.

Emirati exports to the US amounted to $6.9 billion in 2022, 10 percent higher than the previous year and up 206 percent over 2012, according to the US Trade Representative. 

But the bigger issue with the Trump tariffs is their knock-on effects on the world’s and region’s economies, says Rachel Ziemba, founder of advisory firm Ziemba Insights. 

The US dollar and interest rates may move higher, taking with them Gulf currencies pegged to the dollar and local interest rates.  

“That would make GCC imports relatively more expensive and, if it’s not happening at the same time that oil prices are going up, there’s a challenge there,” she says.

The UAE, a major transhipment center, may want to harness the diversion of trade flows away from pricier direct routes between the US, China and other high-tariff nations.   

But if the tariffs simultaneously suppress US demand for foreign goods and dampen global growth, that’s not necessarily a “great opportunity”, Ziemba notes. 

A world less friendly to free trade also casts shadows on the UAE’s push to advance 24 comprehensive economic partnerships in the past four years, according to Ziemba. 

On the other hand, Trump is expected to unleash fresh support for the cryptocurrency industry.

“The UAE’s continued efforts to become a global crypto hub now seem like a better bet – at the very least there will be support from some prominent players in the Trump administration’s orbit,” says Mogielnicki.

Emirati stakeholders will also continue striving to acquire advanced US semiconductors. More deals similar to that between G42 and Microsoft may materialise as Trump is expected to carry forward the Biden administration’s efforts to ring-fence artificial-intelligence chips from China. 

The US and the UAE may see eye-to-eye on innovation. But rising great power competition between Washington and Beijing could turn into a “thorny” puzzle for the latter’s ‘open door’ foreign policy – which includes China and Russia, according to David Hamod, president and chief executive of the National US-Arab Chamber of Commerce.

Other areas ripe for bilateral cooperation are real estate, hospitality and tourism, which are “near and dear” to the incoming president and within the UAE’s “exceptional expertise” according to Hamod.

“The recent pledge of $20 billion by Damac is just an opening salvo in what is expected to be a ‘friendly bidding war’ involving President Trump’s attention and Arab world largesse,” Hamod says.

The same industries will also see more Trump-brand dealings in the region, building on a portfolio that already includes properties in the UAE, Saudi Arabia and Oman, says Dania Thafer, Gulf International Forum’s executive director in Washington DC.

“Business with the Trump family has not really stopped since he left office,” she notes. “I believe it will continue to accelerate.” 

As both the UAE and Saudi Arabia see an opportunity to get the returning president’s attention in a busy and uncertain world, they are bound to compete with each other for it, according to Simon Henderson, director of the Gulf and energy policy program at The Washington Institute for Near East Policy.

“The state of the rivalry at the moment is that Saudi Arabia is a bigger hitter than the UAE, but [President Mohamed bin Zayed] is probably prepared to contest that,” Henderson says. “The UAE is well placed within Washington DC to be able to reactivate its links with Trump.”

“So my guess would be that the reaction to watch is what Trump is interested in.”