What To Know
- According to experts the Gulf Cooperation Council member states together with the United Arab Emirates face minimal harm from the new tariffs imposed by US President Donald Trump which have negatively affected global markets and provoked strong reactions from leading economies.
- The new trade policy applies a base 10% tax to all incoming imports to the United States yet it doubles or triples the duties for foreign entities that maintain large trade surpluses with America.
- Due to its fixed currency relationship with the US dollar the UAE dirham becomes vulnerable to purchasing power erosion and inflation when the dollar strengthens.
According to experts the Gulf Cooperation Council member states together with the United Arab Emirates face minimal harm from the new tariffs imposed by US President Donald Trump which have negatively affected global markets and provoked strong reactions from leading economies.
Why the GCC Avoids Higher Tariffs
The new trade policy applies a base 10% tax to all incoming imports to the United States yet it doubles or triples the duties for foreign entities that maintain large trade surpluses with America. Because of their positive trade surplus with America the Gulf nations kept away from “worst offender” classification which prevented them from getting higher import tariffs.
Vijay Valecha from Century Financial stated that “The GCC region together with the UAE is expected to maintain its insulation from these new tariffs.” The $27 billion value of American exports to the UAE during 2024 exceeds the $7.5 billion worth of imports thereby enabling the UAE to avoid higher US tariff classifications.
Trump’s trade policy focuses its taxes on countries which run significant trade deficits against the United States including China the European Union and Japan. The existing measures will reportedly supply $700 billion per year in revenue yet they intensify global trade conflicts.
Potential Indirect Consequences for the GCC
Expert analysts predict that the UAE along with other Gulf neighbors will not face direct tariff increases but they remain at risk of developing secondary effects.
The GCC countries that export oil face market instability because global economic decreases triggered by tariffs tend to decrease oil price levels and market demand.
Due to its fixed currency relationship with the US dollar the UAE dirham becomes vulnerable to purchasing power erosion and inflation when the dollar strengthens.
The price increase of essential items in automobile marketing along with electronics goods and construction materials will increase inflation in the market.
The economic stability of GCC nations persists as Dubai continues developing its trade and investment alliances across markets that extend past U.S. borders.
