What Trump’s second term means for Middle Eastern logistics

Reuters

Donald Trump’s re-election as US president will bring major shifts in domestic and foreign policy. These are likely to influence the supply chain and logistics sectors in the Middle East, creating both challenges and opportunities for businesses navigating this evolving landscape.

One of Trump’s keystone policies is the imposition of across-the-board tariffs on imports. He has promised to introduce tariffs of 60 percent on Chinese imports and 10 percent on goods from everywhere else, in an effort to protect and support US domestic manufacturing. 

But these are only economists’ estimates. In reality, Trump has not placed an upper limit on these trade measures. With Congress and the Senate in Republican hands, Trump will have pretty much limitless powers to implement any trade policy he likes.

Obviously, this is potentially very bad news for international trade, shipping and air cargo, and could hit goods transiting or originating at any of the GCC’s major hubs. 

In 2023 the UAE’s non-oil exports to the US reached $6.6 billion, while Saudi Arabia’s non-oil exports totalled $2.3 billion.

That said, Trump’s retrenchment could accelerate the growth of Middle Eastern regional supply chains, especially if other major economies such as India and China use the policy as an opportunity to advance their influence through increased levels of trade and investment. If this is the case, then the GCC hub ports and airports will be well placed to exploit the rebalancing of trade flows.

Trump’s re-election could be seen as a setback for the global green transition

Trump’s domestic energy policy may also have deep-felt consequences. If he sticks to his mantra of “Drill, baby, drill” or, as another campaign slogan puts it, “American oil from American soil”, it is likely that world oil supplies will increase and the price may fall dramatically. 

Some analysts have even been talking of levels dropping to $40 a barrel, from around $70 at the time of his election.

While this is good news for shipping and air cargo companies, such a fall could have a huge impact on new investment in the energy sector in the Middle East. 

It would also mean that governments across the region would have substantially less money to invest in development projects, reining back some ambitious transport infrastructure and tourism plans that were already at risk. This would be bad news for companies working in project logistics and other ancillary services. 

Trump’s re-election could also be seen as a setback for the global “green transition”. While it may not have a direct impact on renewable energy projects across the Middle East, it is likely to slow or halt intergovernmental discussions on carbon taxes for maritime shipping.

Trump’s previous administration withdrew the US from the Paris Agreement, the international treaty aimed at limiting global warming. If implemented, carbon taxes on international shipping could have increased costs and slowed global trade, challenging the Middle East’s shipping and ports sectors.

The effects of a renewed US focus on fossil fuels and its absence from climate discussions on global net-zero targets remain to be seen.

Challenge

Most media attention, however, is likely to focus on Trump’s foreign policy approach to the ongoing conflict in Israel, Gaza and Lebanon. While the President-elect has resolved to “end wars, not start them”, his strategy for achieving peace in the region remains unclear. 

During his previous term, Trump was a strong supporter of Benjamin Netanyahu, yet he also played a pivotal role in establishing the Abraham Accords, which strengthened ties between Israel, Saudi Arabia and the GCC countries. 

Should Trump use his political influence to ease the Iran-Israel conflict, it could unlock significant economic benefits for the region, allowing supply chains to stabilise and pre-conflict projects to resume.

Achieving this, however, would be a monumental challenge, particularly given Trump’s well-known hostility towards Iran, a central player in the conflict.

In fact, worsening US-Iran relations could increase instability in strategic areas such as the Red Sea and the Strait of Hormuz.

In reality, no one can predict the exact course the notoriously unpredictable President Trump will take.

John Manners-Bell is CEO of Transport Intelligence Insight and founder of Foundation for Future Supply Chain