Trump's Gulf visit looms over new EU-UAE trade talks as president teases ‘very big' announcement

Arabian Business

07-05-2025

The European Union and United Arab Emirates' newly launched trade negotiations face an uncertain backdrop as U.S. President Donald Trump has teased a 'very, very big' announcement ahead of his Middle East tour beginning next week — a visit experts say could significantly impact regional economic alignments.
Speaking to reporters today, Trump described the forthcoming announcement as 'one of the most important announcements that have been made in many years,' adding it would come either 'Thursday, Friday or Monday' before his May 13 departure for the region. The President did not elaborate on specifics but said it was 'as big as it gets' and 'very positive.'
The timing creates additional complexity for the EU-UAE Comprehensive Economic Partnership Agreement (CEPA) negotiations announced last month, with reports suggesting Gulf nations are finalising commercial and defence agreements with the U.S. worth nearly $3 trillion.
'It remains to be seen whether what Trump manages to negotiate with those three GCC economies could dampen the region's willingness to move forward with diversification of trade partners,' warned Nicolas Michelon, Managing Partner at Dubai-based corporate geoeconomics consultancy Alagan Partners.
EU-UAE talks and strategic timing
The EU-UAE trade negotiations, announced on 10 April, came just eight days after Trump unveiled his 'Liberation Day' tariffs — timing that experts view as strategically significant.
'The EU-UAE trade talks were announced on April 10, which is almost to the day, a week after Trump announced his famous 'Liberation Day' tariffs,' explained Michelon.
This bilateral approach represents a significant departure from historical practice, where EU-UAE trade discussions were conducted exclusively within the broader Gulf Cooperation Council framework — talks that have remained suspended since 2008.
'Up until this written announcement, all the discussion for comprehensive economic partnership agreements, free trade agreements, call them what you want, between Europe and the UAE were essentially a function of Europe-GCC talks,' Michelon added.
Trump's Middle East tour, beginning May 13 with stops in Saudi Arabia, Qatar, and the UAE, now appears poised to reshape regional economic calculations.
According to Bloomberg, Saudi Arabia is eyeing a $1 trillion investment in the U.S., while the UAE has pledged to invest $1.4 trillion over the next decade in AI infrastructure, semiconductors, energy, and manufacturing.
These potential agreements span defence, aviation, technology, and infrastructure sectors, with weapons sales expected to feature prominently. The U.S. recently approved a $3.5 billion arms package to Saudi Arabia.
Balancing Act for Gulf Nations
These developments create a delicate balancing act for Gulf nations, particularly the UAE, as they navigate economic relationships with both the United States and the European Union.
'Nobody should underestimate the ability that Washington still has to put pressure on economies to slow down their diversification efforts,' said Michelon.
'The White House seems to have finally understood the potentially catastrophic consequences of its recent trade policy on U.S. economic influence.'
Dr Khalifa Al Suwaidi, Research Fellow and Head of the Gulf-Europe Research Programme at the Anwar Gargash Diplomatic Academy, framed the UAE's position as one increasingly defined by pragmatic self-interest.
'National interest trumps this semblance of unity, which is still there but albeit not really as important nor will it ever supersede national interests, at least in the UAE's case,' he added.
Complementary EU-UAE interests
Despite these uncertainties, the core complementary interests underpinning the EU-UAE trade talks remain compelling for both parties.
The EU is already the UAE's second-largest trading partner, accounting for 8.3 per cent of its total non-oil trade, valued at $67.6 billion in 2024. For the European Union, the UAE serves as its largest export destination and investment partner in the Middle East and North Africa region.
Sources suggest the central pillars of the negotiations include renewable energy, green hydrogen, critical raw materials, advanced manufacturing, healthcare, logistics, and artificial intelligence.
'Europe has extremely ambitious decarbonisation agenda and Net Zero targets,' said Michelon. 'It necessitates that Europe's member economies must import clean hydrogen massively from high-capacity producers like the UAE.'
For the UAE, the interests still lie in diversifying its economy.
'The UAE has outperformed most of its GCC counterparts when it comes to economic diversification. Mostly in part recently due to its emphasis on promoting trade and connectivity and also digital governance,' Al Suwaidi explained.
Sense of urgency heightened
Trump's teased announcement and the reported scale of potential U.S.-Gulf deals have heightened the sense of urgency for European negotiators, according to experts.
'If I was Europe, I would try to make as much progress on this, on this free trade agreement with the UAE as possible,' Michelon advised.
'Economic blocs like Europe need to move extremely fast, because the GCC economy is welcome under tremendous pressure not to go down that road too aggressively.'
In her announcement last month, European Commission President Ursula von der Leyen noted that Commissioner Maroš Šefčovič would soon return to the UAE to advance the negotiations — a timeline that now appears even more pressing as the region awaits Trump's announcement and subsequent visit.