MENA Economies Brace For Indirect Fallout From US-China Tariff Escalation

2025-05-05 04:09:10

(MENAFN- The Arabian Post)

The Middle East and North Africa region is poised to experience indirect economic repercussions from the intensifying trade conflict between the United States and China, primarily through diminished global growth prospects and declining energy prices, rather than direct trade disruptions.

Moody's Investors Service has highlighted that the exclusion of oil and gas from the latest US tariff measures mitigates immediate direct impacts on MENA economies. However, the broader consequences of the trade war, including weakened global demand and potential shifts in investment flows, are likely to affect the region's economic stability.

The US administration, under President Donald Trump, has implemented a 10% universal import tariff, with specific duties reaching up to 145% on Chinese goods. In retaliation, China has imposed tariffs of up to 125% on American products. While these measures do not directly target MENA exports, the resultant slowdown in global trade and economic activity is expected to suppress energy demand, leading to softer oil prices-a critical concern for oil-dependent MENA economies.

Analysts suggest that the trade tensions could lead to a contraction in global GDP, with the International Monetary Fund warning of a potential 7% decline if the decoupling between the US and China persists. Such a downturn would have cascading effects on MENA countries, particularly those reliant on hydrocarbon revenues and foreign investment.

The uncertainty surrounding global trade policies may deter investment in the region, as businesses adopt a cautious approach amid the volatile economic landscape. This hesitancy could impede diversification efforts and stall infrastructure projects critical to long-term growth in MENA nations.

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