US Tariffs Set to Impact MENA Economies Amid Exemptions for Oil Exports

Arabian Post Staff -Dubai

The United States has imposed a series of tariffs on countries within the Middle East and North Africa region, aiming to address what the administration describes as long-standing unfair trade practices. While these measures are poised to affect various sectors, exemptions granted to oil exports are expected to mitigate the overall economic impact on the region’s leading exporters.

In contrast, non-GCC countries in the MENA region are facing steeper tariffs. Iraq has been hit with a 39% tariff rate, while Libya and Algeria are contending with tariffs of 31% and 30%, respectively. Jordan and Tunisia are also affected, with tariffs set at 20% and 28%. Syria faces the highest tariff in the region at 41%. Egypt, Morocco, Lebanon, and Sudan have been assigned the baseline 10% tariff, aligning them with the GCC countries.

Despite these broad-ranging tariffs, the US administration has exempted oil and gas imports from these measures. This exemption is particularly significant for the MENA region, where energy exports constitute a substantial portion of trade with the US. For instance, crude oil exports from Saudi Arabia, Iraq, and Libya, which represent a major share of their export revenues, will not be subject to the new tariffs. This strategic decision aims to prevent disruptions in the global energy market and avoid potential increases in fuel prices domestically.

Iraqi officials have expressed that the economic impact of the tariffs will be “very limited,” primarily due to the exemption of oil exports. Iraq maintains an annual trade surplus of $5.7 billion with the US, bolstered by a doubling of oil sales over the past two years. Similarly, analysts suggest that the tariffs imposed on Libya and Algeria will have a limited effect, given that energy exports, which constitute the majority of their combined $4 billion in sales to the US, are exempted.

However, concerns remain regarding the broader economic implications of these tariffs. Fitch Ratings has revised its global economic growth forecast downward, citing the escalating US trade measures as a contributing factor. The agency now anticipates global growth to slow to 2.3% in 2025, down from a previous estimate of 2.9% for 2024. The aggressive trade policies are expected to drive inflation higher and delay potential interest rate cuts by the Federal Reserve, creating a challenging environment for global markets.

For the MENA region, the indirect effects of the US tariffs could manifest through fluctuations in oil prices and inflation rates. BMI Research, a unit of Fitch Solutions, indicates that while direct tariffs on MENA countries are unlikely, the region could face challenges related to oil price volatility and inflationary pressures. Lower oil prices could negatively impact oil-exporting countries, potentially leading to adjustments in government spending and economic policies.

The tariffs may influence monetary policies in countries with currencies pegged to the US dollar, such as those in the GCC. A stronger dollar, resulting from sustained tariff introductions, could make imports more expensive and diminish local industry competitiveness, leading to worsening trade balances and lower GDP growth in these economies.

Also published on Medium.

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