What effect will Trump's tariff 'Liberation Day' have on MENA?

Donald Trump has unveiled a new wave of tariffs in an announcement from the White House on Wednesday, marking so-called "Liberation Day" and raising fears of a global trade war.

Trump announced a series of "reciprocal" tariffs, which are intended to match the duties that other countries impose on US products.

The proposed measures include a 25% tariff on imported vehicles, steel, aluminium, and various other goods.

While the administration asserts that these tariffs will bolster US manufacturing and generate significant revenue, critics express concerns that such actions will disrupt global supply chains, increase consumer prices, and provoke retaliatory measures from affected countries, potentially escalating into a full-scale trade war.

Though primarily aimed at economic rivals such as China and the European Union, the effects of this trade war are indirectly influencing the economic stability, trade balances, and geopolitical relationships of numerous MENA nations.

The New Arab looks into how Trump's tariff 'trade war' could potentially impact MENA countries.

Which countries have been directly hit by Trump's tariffs?

All of the MENA countries have been hit with Trump's tariffs.

Some countries have been charged only at the baseline rate of 10 percent, these include Egypt, Saudi Arabia, Lebanon, Bahrain, Qatar, Yemen, Morocco, Kuwait, Turkey, Sudan, Oman, the UAE and Iran, though it is heavily sanctioned by Washington.

Other countries have been listed among what Trump characterised as the "worst offenders", with higher rates of tariffs imposed on them.

These include Syria, which has been hit with a 41 percent tariff charge, Iraq at 39 percent, Libya at 31 percent, Algeria at 30 percent, Tunisia at 28 percent and Jordan at 20 percent.

Israel, which tried to circumvent Trump's tariffs by cutting its own duties on US goods, still got hit with a 17 percent rate. 

What will the affects be on countries directly affected?

The most damaging consequence will be a potentially devastating loss in jobs. 

Despite only being charged 10 percent by Trump, Egypt depends on the US as a primary market for its garment and textiles industry, with over $1.1 billion in apparel exports to the United States in 2023. The new tariffs charge could erode the competitiveness of its exports, leading to decreased orders, which therefore lead to job losses in a sector that employs hundreds of thousands.

Jordan would face similar risks with a 20 percent tariff on US goods, given it exports to the US reached nearly $2.9 billion in 2024, with $1.7 billion of that in garments. The country's vital textile sector, a major employer, could be hit by shrinking demand if US buyers shift to cheaper or untaxed alternatives. 

Tunisia and Algeria both have much less diversified economies, meaning the imposition of their much higher rate of US duties could complicate efforts to expand industrial exports, particularly in sectors like agriculture and manufacturing.

Both countries are already contending with high unemployment and sluggish growth, and a hit to trade would only worsen fiscal and social pressures.

Oil threat

One of the most notable indirect consequences of Trump's wave of new tariffs could be a fall in demand for MENA oil. 

As Trump's tariffs create uncertainty and potential slowdowns in global economic activity, the demand for energy resources like oil and natural gas could decline. Reduced industrial output, particularly in China—the largest oil importer—and Europe, could drive global oil prices downward.

Countries heavily reliant on oil exports, such as Saudi Arabia, Iraq, Algeria, and Kuwait, could face budget deficits, forcing governments to scale back public spending, delay infrastructure projects, or borrow more heavily to cover shortfalls.

Inflation danger

In North Africa, countries like Egypt, Tunisia, and Morocco, which heavily rely on imports of grain, fuel, and consumer goods, could experience heightened inflationary pressures due to disrupted global supply chains and rising import costs stemming from tariffs.

Egypt, the world's largest wheat importer, may encounter increased costs for essential commodities like bread, posing risks of economic instability or social unrest reminiscent of past events triggered by price spikes.

Currency volatility is another consequence facing several MENA nations. Countries with less robust currencies, such as Egypt, Lebanon, Tunisia, and Algeria, are particularly vulnerable to fluctuations arising from global economic tensions.

All of these countries may experience currency depreciation, making imported goods more expensive, which, in turn, exacerbates inflation, and places additional burdens on consumers. Lebanon, already grappling with profound economic crises, could find its recovery efforts further complicated by these global economic disruptions.