Middle Eastern Firms Assess Impact of New U.S. Tariffs

President Donald Trump’s administration has announced sweeping tariffs, including a baseline 10% levy on all imports into the United States, with higher rates for specific countries. This development has prompted companies across the Middle East to evaluate potential repercussions and strategize accordingly.

The Gulf Cooperation Council nations—comprising Saudi Arabia, the United Arab Emirates , Qatar, Kuwait, Oman, and Bahrain—are subject to the 10% tariff. Given that many of these countries maintain trade deficits with the U.S., exporting less than they import, the direct impact on their export sectors may be somewhat limited. Nevertheless, businesses are closely monitoring the situation to mitigate any adverse effects.

In Saudi Arabia, the main stock index experienced a 0.4% decline following the tariff announcement. Major entities such as Saudi National Bank and Saudi Aramco saw their shares drop by 1.5% and 0.8%, respectively. Concurrently, a decrease in oil prices, with Brent crude falling 7% to $69.60 per barrel, has added to economic concerns, as the kingdom’s economy is heavily reliant on oil exports.

The UAE, particularly Dubai, also felt the impact, with the Dubai Financial Market General Index dropping 1.8%. Emaar Properties, a leading real estate developer, faced an 8.9% decline, its most significant since late 2021. While some of this decrease is attributed to ex-dividend trading, the broader market sentiment reflects apprehension regarding the new U.S. trade measures.

Israel faces a more pronounced challenge, with a 17% tariff imposed on its exports to the U.S. Key sectors such as machinery and medical equipment are anticipated to be affected. The Israeli Finance Ministry is formulating necessary steps to respond to these tariffs, aiming to support exporters and maintain trade relations.

Economists have expressed concerns that these tariffs could exacerbate global economic tensions, potentially leading to increased inflation and a higher risk of recession. The International Monetary Fund has warned of the broader economic risks associated with escalating trade barriers.

In response to the U.S. tariffs, several countries are considering or have already implemented retaliatory measures. The European Union is preparing countermeasures, while Canada and Mexico have imposed tariffs targeting U.S. goods, particularly in the automotive sector. These actions contribute to growing fears of a global trade war, which could have cascading effects on economies worldwide, including those in the Middle East.