On Thursday 12 December, we hosted the webinar “Trump and Tariffs: A Global Perspective of What Lies Ahead”. The session focused on the potential tariff impacts of President-Elect Trump’s second term in office, giving a global perspective on what to look out for, and how best to prepare.
Speakers from across the globe discussed the potential impacts in their respective jurisdictions, the key takeaways of which can be found here.
Highlights from our Middle East speaker Laya Aoun (Dubai) are set out below, and can be heard here. To listen to the full webinar, please click here.
Highlights from the Middle East
- Relations between the Gulf Cooperation Council (“GCC”) and the U.S.: The GCC is the largest exporter to the U.S. in the region. U.S. exports to the GCC consist of commodities, vehicles, aircraft, mechanical and electrical machinery, phones, and precious and semi-precious stones. The GCC exports to the U.S. consist of mineral fuels, mineral oils, derivative products, and aluminium.
- Expected effect: Trump’s tariffs will have a limited direct impact, but a stronger effect on countries that rely heavily on oil and gas revenues, such as the GCC. There may be an influence on Foreign Direct Investment flows to the Middle East, although conversely the Middle East could benefit by attracting Foreign Direct Investment as companies seek to reduce their reliance on the U.S. market and diversify their supply chain. Countries such as Bahrain and Oman may have the opportunity to renegotiate their Free Trade Agreements (FTAs) with the U.S.
- Mitigants to Trump’s potential tariffs on the Middle East: Some countries are considering mitigating their reliance on the U.S. market by strengthening trade relations with other regions, such as Asia, and considering a broader range of suppliers. Recently, GCC countries have started to diversify their economies away from oil dependency through investment in technology, manufacturing, and tourism. This trend is expected to continue, leading to a reduction in export dependency in general.
- Overall impact: The overall impact of U.S. tariffs will depend on local adaptation to the changes and the ripple effects on global supply chains. We may see a departure from reliance on the U.S. economy.
Mitigation measures
Key takeaways for businesses include implementing due diligence on global supply chains, with a particular emphasis on targeted jurisdictions such as China and the US’s USMCA counterparts. Whilst Trump’s second term will be unpredictable, key mitigation strategies can be implemented, such as relocation of production (subject to anti-circumvention rules – see our blog post on the recent ECJ case on anti-circumvention of tariffs), considering contractual clauses and exclusions, as well as possible lobbying.
