Talks begin on US-UAE trade pact as metal tariffs double

• Cepa floated during Trump’s visit
• UAE companies face growing costs
• US has trade surplus with UAE

UAE officials are to begin negotiations toward a bilateral trade deal with the United States as part of efforts to secure lower tariffs on Emirati steel and aluminium products in particular.

Washington and Abu Dhabi have agreed to commence talks after the idea was floated during President Donald Trump’s visit to the Gulf in mid-May, Reuters reported.   

The trip cemented the US administration’s warm ties with Gulf states and yielded hundreds of billions of dollars in commercial deals. 

During Trump’s stop in Abu Dhabi, stakeholders announced several multi-billion-dollar partnerships in fields from advanced technology to critical minerals as they pledged to accelerate a ten-year, $1.4 trillion investment commitment that senior Emirati officials had made during an earlier visit to Washington in March.

Nevertheless, the UAE is subject to Trump’s 10 percent universal levy on all imports into the US regardless of origin, as well as sectoral tariffs. Washington first set those on aluminium and steel at 25 percent, but doubled them this week.

Emirati producers sold nearly 350,000 metric tonnes of aluminium to US companies in 2024. They are the second-biggest supplier of the metal to the US, but far behind Canada, which exported more than 3.15 million tonnes, according to US International Trade Administration figures. 

Analysts have told AGBI that low energy costs in the GCC may ultimately be to the advantage of local aluminium producers as companies everywhere contend with the same US levies.

Overall bilateral trade between the UAE and the US is not especially remarkable. It rose 8.5 percent in 2024 over 2023 to reach $34.4 billion, according to data from the Emirati embassy in Washington.

The US had a $19.5 billion trade surplus with the UAE, which should endear it to Trump who is averse to a deficit.

But businesses in the Gulf state are still exposed to the indirect impact of America’s new protectionist policies through their spillover effects on the global supply chain, consumer demand and oil prices, among other factors.

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Sixty five percent of UAE-based companies recently surveyed by HSBC said they faced growing costs and a worsening outlook.  

Emirati officials in recent years have made bilateral trade deals a priority, and have signed more than two dozen comprehensive economic partnership agreements with nations ranging from the Republic of Congo to Costa Rica.

Negotiations for an agreement between the UAE and the Europe Union were relaunched in April.