Today's Edition
A. SREENIVASA REDDY (ABU DHABI)
Even as US President Donald Trump launched a sweeping round of tariffs on imports, sending shockwaves through the global economy, experts believe the UAE and the wider GCC are well-positioned to weather the impact. Some even argue that this could present an opportunity for the UAE to consolidate its industrial base and strengthen its trade position.
Trump announced a 10% baseline tariff on all imports into the United States, with higher duties imposed on key trading partners. The European Union faces a 20% tariff, Japan 24%, and South Korea 25%, while China and India are subject to 34% and 26% tariffs, respectively. The UAE and other GCC nations were relatively spared, facing a 10% tariff, while other Arab countries, including Jordan (20%), Syria (41%), Iraq (39%), Libya (31%), Algeria (30%), and Tunisia (28%), were hit harder.
Dhaval Jasani, Founder and CEO of ZTI Global, downplays concerns about the impact of tariffs on UAE exports. "A 10% tariff on UAE goods is unlikely to significantly impact exports. The UAE primarily exports crude oil, aluminium, and precious metals—all of which will remain in high demand. If necessary, these products can be diverted to alternative markets," he said.
However, a major relief came with a clarification that gold and silver would be exempt from tariffs. "The thriving gold sector in the UAE can breathe easy," Jasani noted.
The UAE has consistently maintained a trade surplus with the US since 2019, largely due to hydrocarbon exports. In 2023, the UAE recorded a trade surplus of $1.7 billion, which was lower than Saudi Arabia ($6.2 billion), Qatar ($4.1 billion), and Kuwait ($2.3 billion).
Experts see the tariffs as an opportunity for the UAE to position itself as a hub for manufacturing and trade.
"Tariffs open doors for industries to consider the UAE as an alternative jurisdiction for setting up manufacturing and export facilities," Jasani said. He pointed to high-value sectors such as mobile phone manufacturing, suggesting that companies in Asia may increasingly look to the UAE as a preferred production base.
Neeraj Ritolia, former chairman of the ICAI Abu Dhabi Chapter, echoed this sentiment. "The tariffs may push affected exporters to reroute trade through the UAE, reinforcing its role as a re-export hub," he said. While concerns over the original source of goods may arise, he suggested that "considerable value addition in the UAE" could mitigate such issues.
Despite concerns over the broader global economy, some believe the UAE is well-placed to navigate this period of uncertainty. "Trump’s tariffs may bring short-term challenges, but nothing the UAE can't handle," said Samer Mardini, Chief Investment Officer at Yorklyn Asset Management. "The UAE has a strong, resilient, and diversified economy that can adapt. This could actually strengthen its global trade relationships, accelerate innovation and digital growth, and further establish it as a leading investment and logistics hub."
Krishnan Narayanan Venkat, Chairman of the ICAI Abu Dhabi Chapter and Partner at Andersen UAE, also sees potential benefits. "The UAE's position as a competitive alternative for global trade and logistics has been reinforced. While major economies like China, Canada, India, and the EU face trade disruptions, the UAE could benefit from redirected trade flows," he said.
He also highlighted that the UAE’s oil exports might gain from reduced competition, particularly as China continues to import energy. "The country’s economic diversification efforts have positioned it well to adapt to shifting trade dynamics, strengthening its appeal to global investors," Krishnan added.
While Trump’s tariffs have raised concerns worldwide, experts agree that the UAE's investor-friendly policies, resilient economy, and strategic positioning may allow it to turn this challenge into a long-term opportunity.
