Trump tariffs: Middle East braces for pain after gain

• Increased US tariffs expected
• Short-term business increase
• Longer-term challenges

Middle East exporters to the US are likely to see a short-term increase in business ahead of the much talked about trade tariffs which are expected to be announced when Donald Trump returns to the White House this month.

The US president-elect campaigned on a protectionist America-first agenda, promising to introduce sweeping tariffs globally.

Trump has said that on his first day in office he plans to use emergency executive authority to introduce 25 percent tariffs on Canada and Mexico and a 10 percent tariff on goods from China, which is expected to rise considerably.

The effects in America are already being felt. S&P Global report increased safety stockpiling from North American manufacturers, as US firms anticipate higher imported costs.

That is likely to have a knock-on impact on Middle East companies dealing with the US, according to Ali Metwally, an economic advisor at the UK-based IBIS Consultancy.

“In the short term, Middle Eastern businesses that export to the US may experience a temporary surge in demand as US firms look to build inventories before any tariffs come into effect,” he told AGBI.

But the long-term view is more cautious. Metwally warned that tariffs will reduce the competitiveness of Middle Eastern products in the American market.

“This is especially concerning for the GCC economies with strong trade ties with the US in oil, gas and petrochemical products,” he said.

Total trade between the GCC and the US in 2022 reached $94.7 billion, which was made up of $49.7 billion worth of imports and $45 billion worth of exports, according to the GCC Statistical Centre.

“Stockpiling to mitigate import cost risk makes sense and it might be that is driving an uptick in US demand for goods from the Middle East,” said Justin Alexander, from the US consultancy Khalij Economics.

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Alexander also indicated that the export of metals in particular might be impacted.

Trump’s tariffs could see the bloc of six Gulf countries rely more on one another, Metwally said.

“The GCC states could deepen economic integration within the region to compensate for reduced US demand,” he said.

This article was first published on December 23 2024