April 2 was anything but business as usual. On what he dubbed “Liberation Day,” U.S. President Donald Trump slapped sweeping new tariffs on nearly every country doing business with the U.S. It didn’t take long for ripple effects to reach Arab capitals.
From Riyadh to Rabat, the consequences are beginning to bite. With currency pegs to the dollar and deep trade ties to American industries, Arab economies are now bracing for a hit they didn’t sign up for.
U.S. Tariffs Have Triggered a Domino Effect Across Arab Markets
When Trump kicked off his trade crusade back in January, few expected the fallout to land so hard on the Arab world. But here we are.
The U.S. trade footprint in the region is massive. According to the Office of the U.S. Trade Representative (USTR), total goods trade between the U.S. and the Middle East/North Africa (MENA) hit $141.7 billion in 2024.
Exports from the U.S. surged to $80.4 billion, marking a 5.8% increase over 2023. Imports from the region dropped slightly to $61.3 billion, down 1.6%. But here’s the twist—America’s trade surplus with MENA grew by nearly 40%, reaching $19.1 billion.
That lopsided surplus? It’s part of what triggered Trump’s latest tariff spree.
Why Arab Countries Are More Exposed Than Most Think
Some might assume that China or Europe are taking the brunt of this trade war. Not quite. Arab economies are far more exposed than many realize. Here’s why.
Many Gulf nations, like Saudi Arabia and the UAE, peg their currencies directly to the U.S. dollar. When the dollar strengthens—especially artificially through protectionist moves—it makes their exports less competitive globally.
And then there’s the energy trade. Although oil is globally priced, downstream products, petrochemicals, and industrial goods tied to U.S. demand have taken a hit.
Arab countries import a lot of machinery, vehicles, electronics, and agricultural products from the U.S. Higher tariffs mean higher costs. That’s inflation—imported, not made locally.
The 10 Arab Countries Feeling the Heat the Most
So which Arab nations are on the front lines of Trump’s trade war? Based on 2024 trade data, currency exposure, and reliance on U.S. exports/imports, here’s a look at the top 10 most affected:
| Country | Key U.S. Trade Links | Exposure Factors |
|---|---|---|
| Saudi Arabia | Oil, defense, construction equipment | Dollar peg, large U.S. import reliance |
| United Arab Emirates | Tech, aviation, energy components | Dollar peg, re-export hub, aviation sector |
| Egypt | Wheat, auto parts, manufacturing | High U.S. import volume, tourism fragility |
| Qatar | LNG tech, aircraft, industrial goods | Dollar peg, energy-heavy trade |
| Morocco | Electronics, agriculture, apparel | Exports to U.S. at risk, rising import costs |
| Jordan | Textiles, phosphate, U.S. aid links | QIZ dependence, dollar influence |
| Kuwait | Defense, oilfield equipment, finance | Dollar peg, sensitive capital flows |
| Oman | Industrial machinery, vehicles | Dollar peg, rising import inflation |
| Bahrain | Aluminum, oil-related equipment | U.S. defense trade, manufacturing exposure |
| Tunisia | Apparel, food processing, tech | Fragile economy, vulnerable export sectors |
Notably, Lebanon, Algeria, and Iraq rank just outside the top ten due to their limited or inconsistent trade levels with the U.S.
Business Leaders Sound the Alarm as Uncertainty Grows
In Riyadh, logistics executives are already reporting delays in importing American machinery and replacement parts. A CEO of a petrochemicals firm in Doha called the new tariffs “a shock that’s still unraveling.”
Here’s what’s cropping up in closed-door conversations:
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Some Gulf-based companies are actively scouting for alternative suppliers in Europe and Asia.
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North African exporters, especially in textiles, are seeing cancellations from U.S. buyers who now face higher resale prices.
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Governments are re-evaluating their budget forecasts, especially those reliant on dollar-linked trade income.
“We expected Trump to protect American jobs,” said a UAE trade advisor. “We didn’t expect to get swept into the storm like this.”
Currencies Pegged to the Dollar Are a Double-Edged Sword
It’s easy to forget how much monetary policy matters—until it doesn’t go your way.
For countries like Saudi Arabia, Kuwait, and Bahrain, their dollar peg is both a blessing and a curse. It brings stability in calm waters. But in a storm? It limits their options.
These pegs mean Arab central banks can’t easily adjust interest rates or devalue their currencies to soften the blow. Inflation? Can’t fight it with policy tweaks. Currency competitiveness? Off the table.
Long-Term Economic Goals Now Face Fresh Headwinds
Many Arab countries are deep into economic transformation plans. Think Saudi Arabia’s Vision 2030. Or Egypt’s push to diversify its economy beyond tourism and agriculture.
Foreign investors tend to back off when uncertainty kicks in. That means less capital flowing into infrastructure, manufacturing, and startups. Higher import costs also force governments to divert cash into subsidies or price supports—money that was supposed to go elsewhere.
