UAE: How will Trump's tariffs impact remittances?
"Now more than ever, UAE residents need access to instant remittance services to manage their money," said Mohammad El Saadi, VP of Careem Pay. "The proposed tariffs could trigger broader economic uncertainty and put downwards pressure on the US-dollar pegged dirhams."
Last week, US President Donald Trump announced 10 per cent baseline tariff on all imports to the US and higher duties on several countries — a move that sent global stock markets plummeting, with the danger of a trade war looming. China retaliated with a 83 per cent increase in taxes on American imports and Trump has threatened to hit back with additional tariffs.
Varying impact
El Saadi noted that the impact on remittances would vary depending on the income bracket of the UAE residents. "While lower-income expats in the country are likely to maintain their usual remittance patterns to support their families back home, middle and higher-income earners may start shifting more of their savings out of the UAE in anticipation of a weaker dollar."
He added that some may even choose to send money abroad for investments "to take advantage of market dips" and that this could cause a "short-term spike" in remittances as people looked to protect the value of their money.
Meanwhile, Adeeb Ahamed, Managing Director of Lulu Financial Holdings noted that although there won't be a major impact on remittances, people will be more mindful about sending their money back home in the face of the tariffs. "Cost of living is expected to increase across some impacted products," he said. "UAE being an import country, it relies on other countries to bring in needed items. So some products which pass through the US in the supply chain could see price increases.'
Trends
According to El Saadi, Careem Pay saw the strongest remittances growth in Pakistan, India, Europe, and UK in March. India remained the top corridor by transfer volumes contributing over two-thirds of its total international money transfers.
"January saw a spike in high-value transfers and average remittances per user as favorable exchange rates prompted users to send more money home," he said. "However, some customers have held back transfers due to a decline in the Indian stock market."
On Tuesday, Ahamed had noted that there was a significant shift in the reasons why Indian expats sent money home. He said that now, more people were remitting to invest in the stock market and create a passive income, as opposed to home maintenance, which had been the norm for the last few decades.
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