US President Donald Trump’s threat this weekend to raise global tariffs to 15 per cent from 10 per cent adds to macroeconomic volatility for the Gulf region, although any impact is likely to limited, analysts said.
Mr Trump took to Truth Social on Saturday to say his administration “will determine and issue the new and legally permissible tariffs” during the next few months.
Gulf economies are already facing volatility owing to the imminent threat of a US strike on Iran, consulting firm Iridium said in a note. “President Trump’s indication that he will raise new global tariffs to 15 per cent adds another macro-overhang,” it added.
Mr Trump’s latest move came after the US Supreme Court ruled on Friday that he does not have the authority to impose sweeping tariffs under the International Emergency Economic Powers Act (IEEPA). Mr Trump first invoked IEEPA powers during trade disputes with Canada, China and Mexico last February, before announcing his sweeping April 2 "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 Supreme Court decision dealt a “major blow” to Mr Trump’s tariff agenda and to his ability to impose tariffs using national security authority, Rachel Ziemba, adjunct senior fellow at the Centre for a New American Security, said in a note.
The move to hike the rate to 15 per cent would mean a "slight increase on the current levels” for Gulf countries where the rate was 10 per cent, but Mr Trump has not yet confirmed it. It is “not an executive order”, she told The National.
“The Trump administration is trying to replicate as best as they can the tariff revenues and tariff structures of a couple of days ago – and to buy time,” she added. “The goal is not to increase tariffs from the level two days ago and in that context, it doesn’t necessarily change the circumstances with the GCC.”
Temporary stopgap
The US was set to implement the 10 per cent tariffs from February 24 onwards, although it is as yet unclear whether the 15 per cent levy will also be imposed from the same date. The new levy has been imposed under Section 122 of the 1974 Trade Act, which permits tariffs of up to 15 per cent for a maximum of 150 days without congressional approval.
Basically, the 10 per cent to 15 per cent rise is a temporary stopgap before the US can do investigations that can allow country-specific tariffs, Ms Ziemba said.
“And if it is the 15 per cent, then that would increase the tax Americans pay on goods from the GCC, but the sectorial measures are more important. Energy, fertilisers and critical mineral minerals remain exempt," she said.
The new tariffs exclude hydrocarbon exports to the US, which constitute the vast majority of the exports of the Gulf, said Nassib Ghobril, head of group economic research and analysis at Byblos Bank.
“So, from a direct standpoint, there will be little impact on GCC economies from the new US tariffs,” he said. “More broadly, oil, natural gas, and petroleum products, which account for about 70 per cent of the Mena region's exports to the world, are exempt from new US tariffs.”
Secondary and sector-specific tariffs
Mr Trump’s threat of secondary sanctions on those buying goods from Iran is what is likely to have a much greater impact on the Gulf, Ms Ziemba said.
Mr Trump this month signed an executive order imposing sanctions on Iran’s key trading partners. Mr Trump first announced the tariff threat last month at a rate of 25 per cent. However, the order did not specify a rate, but included an “additional ad valorem rate of duty – for example, 25 per cent – that may be imposed on goods imported into the United States that are products of any country that directly or indirectly purchases, imports, or otherwise acquires any goods or services from Iran”.
Iran’s main trading partners between January and October last year were China, with trade of $14.5 billion, Iraq ($10.5 billion), the UAE ($7.5 billion) and Turkey ($7.3 billion), Trade Data Monitor found.
“Secondary tariffs on Iran’s [trading partners] continue to be a potential risk for the region,” Ms Ziemba said. "These would be even more difficult for the [Trump] administration to impose but could add costs for bilateral trade if backed by Congress. I see them as difficult to impose given close investment links."
Another area of concern for the Gulf pertains to US sector-specific tariffs. The Supreme Court’s decision did not rule on sector-specific tariffs put in place under Section 232, which have a greater impact on the Gulf.
The Section 232 of the Trade Expansion Act allows a US president to adjust imports, including through the use of tariffs, if excessive foreign imports are found to have been a threat to US national security. These tariffs currently include the 50 per cent fees Mr Trump placed on imports of steel and aluminium.
Apart from oil, aluminium is a major export product from the Gulf. The UAE was one of the largest exporters of aluminium into the US in 2024, representing 4.50 per cent of the base metal that America imported that year, data company Tradeimex said. Bahrain accounted for 2.55 per cent. Canada remained the largest exporter of the metal into the US, representing more than 40 per cent of its imports.
“It’s the 232 sectoral tariffs that are more damaging to the region, especially as it reduces US demand for aluminium,” Ms Ziemba said. However, the supreme court ruling makes it more difficult to impose secondary tariffs, she added.
Globally, the recent tariff increases in the US have varying implications across trading partners, UN Trade and Development (Unctad) said in a report this month. “On average, developed economies appear less exposed to recent United States tariff changes," it said. "They tend to face smaller tariff increases and ship a relatively limited share of their exports to the United States. Their diversified export structures and relatively modest tariff adjustments help moderate the overall impact."
Overall, while tariffs rose across all major sectors, the magnitude of the increases and the degree of variation across suppliers differed significantly.
Tariffs on iron and steel have risen sharply, but they have increased at roughly the same rate for all suppliers, so there is little difference between them. In contrast, tariffs on chemicals went up only slightly on average, but they now vary much more between exporters, leading to bigger differences in how competitive each supplier is, the report said.
