The US Supreme Court delivered a major blow to President Donald Trump's economic policy by rejecting his global tariffs, but it is what the justices did not rule on that could have implications for the Gulf.
In a 6-3 ruling, the Supreme Court said Mr Trump does not have the authority to impose sweeping tariffs under the International Emergency Economic Powers Act (IEEPA), which gives a president the power to regulate economic transactions when declaring a national emergency.
The ruling came in after markets had already closed in the UAE, where Abu Dhai's benchmark index declined 0.3 per cent as traders monitored US-Iran tension. US equities, however, responded positively to the court's decision, with all three major indexes on Wall Street closing in the green.
"Gulf markets in GCC countries like Saudi Arabia, UAE, and Bahrain likely see the Supreme Court's ruling as positive for trade stability," said Noureldeen Al-Hammoury, chief market strategist at Equiti Group in Dubai.
Mr Trump had first invoked IEEPA powers during trade spats with Canada, China and Mexico last February before announcing his sweeping Liberation Day tariffs. The announcement placed a 10 per cent universal tariff on all trading partners and harsher so-called reciprocal tariffs on dozens more.
"The decision ends broader emergency tariffs, benefiting oil-dependent economies by easing supply chain pressures," Mr Al-Hammoury said.
Analysts have argued those tariffs would lead to a muted direct impact countries in the Gulf because countries in the region do not have large imports. The Middle East and Central Asia picked up at a 3.2 per cent pace this year, as the region avoided the brunt of the tariffs.
Section 232 tariffs in spotlight
While the court's ruling struck down Mr Trump's signature policy, it did not rule on sector-specific tariffs put in place under Section 232, which has a greater impact on the Gulf.
The Section 232 tariffs include the 50 per cent fees Mr Trump placed on imports of steel and aluminium, which were leading exports of the UAE and Bahrain to the US.
"The metal tariffs are the main concern for the Gulf," said Justin Alexander, director of Khalij Economics and a non-resident fellow a the Baker Institute.
The UAE was one of the largest exporters of aluminium into the US in 2024, representing 4.50 per cent of the metal the US imported that year, according to data company Tradeimex, while Bahrain accounted for 2.55 per cent. Canada remained the largest exporter of the product into the US, representing more than 40 per cent of its imports.
The Financial Times reported last week that the Trump administration was considering rolling back some tariffs on aluminium and steel, which the White House has denied.
And while not a direct impact from the Supreme Court's ruling or Mr Trump's subsequent pledge to place a new 10 per cent global tariff, the dollar movement was expected to be closely followed in the Gulf as well.
Nearly all countries in Gulf have pegged their currencies to the US dollar. Kuwait is the only exception in the bloc, although its dinar is pegged to a weighted basket of currencies dominated by the greenback.
Movements in the US dollar tend to have a direct impact on spending patterns in the Gulf, with analysts saying that it can affect remittances, spending and investment flows, while oil is also priced in US dollars.
"The impact on the dollar and US asset prices is of much greater relevance to the Gulf states than their trade with the US," Mr Alexander said.
The US dollar index was trading 0.20 per cent lower at 97.73 as of 4.33pm ET.
