Oman holds competitive edge through FTA amid US reciprocal tariffs: OABC

Muscat Daily

26-04-2025

Muscat – Amid sweeping US tariff reforms, Oman's longstanding Free Trade Agreement (FTA) with the United States is proving a powerful trade asset. As global exporters brace for higher costs and new barriers to the US market, Oman stands out as a resilient, reliable partner – offering Omani and international firms preferential access to the world's largest economy, the Oman American Business Council (OABC) said.
On April 2, the Trump administration announced reciprocal tariffs on a wide range of imports, aiming to level the playing field for US exporters long burdened by high foreign tariffs. These measures, set to take full effect on July 8, are already reshaping trade routes and prompting companies to reconsider export strategies, OABC noted in a press statement.
'FTA more releant than ever'
According to OABC, the US-Oman FTA is more relevant than ever in 2025.
'Under the FTA, most Omani goods already enter the US duty-free. Even with the new 10% reciprocal tariff, many Omani products – including minerals, fertilisers, and stones – remain exempt. For items now facing a 10% charge, the FTA still eliminates the original US general tariff under Normal Trade Relations (NTR). That's a key distinction,' OABC stated.
Oman is one of only two GCC nations with a bilateral FTA with the US – the other being Bahrain. This gives Oman a unique position, especially as global trade tightens.
But isn't Oman just like other 10% tariff countries? 'Not at all,' OABC responded.
While countries like Saudi Arabia or the UAE may also face a 10% reciprocal tariff, their exports still incur the original general rate, which often ranges from 5% to 25%. That results in a combined duty of 15%–35% or more.
'Omani exporters, by contrast, avoid that general duty altogether. Even for affected products, the total tariff is typically just 10%. And for goods listed in Annex II of Executive Order 14257, the rate stays at zero,' OABC added.
For example, a company exporting shaving products from Oman will face a total tariff of 10%—0% under the FTA, plus the 10% reciprocal charge. The same product from the EU faces a 4.9% general tariff plus 20% reciprocal – totalling 24.9%. A Vietnamese exporter of brooms now faces 48.8% (2.8% general + 46% reciprocal), while Omani brooms incur just 10%.
'This pricing gap gives a real edge to manufacturers and suppliers in Oman. While others face added costs and uncertainty, Omani exporters benefit from stability and preferential US access,' OABC said.
The US-Oman FTA remains one of the most comprehensive trade deals globally. It offers legal protections and dispute mechanisms in the US, fair treatment for licensing and investment, streamlined customs, trade transparency, and access to US government procurement – a right shared by only a few countries.
However, some sectors still face hurdles. Metals like aluminium and steel remain under a 25% tariff via Section 232 of US trade law due to national security exemptions – even with the FTA.
OABC added, 'While the new tariffs drive growth for many industries, there's one exception: Omani companies competing mainly with American manufacturers. US producers face no tariffs and now hold a pricing advantage.'
Manufacturing in Oman
For global firms facing higher US tariffs, Oman is an attractive production base. A company from Asia, Africa, or the EU can shift operations to Oman, add 35% or more local value, and export to the US – often at zero or minimal duty under the FTA.
'But Oman's advantage goes beyond tariffs,' OABC said. 'With stable regulation, competitive energy prices, strategic location, world-class infrastructure, and growing investor incentives, Oman is one of the MENA region's most promising export platforms.'
According to Ali Daud, Chairman of OABC, this is a rare moment when trade policy shifts create real opportunities. He said, 'Oman is ready to welcome international manufacturers and support local exporters with access to the US market. The FTA gives us a serious edge, and we encourage companies to take advantage of it – now, while the window is open.'
Daud also urged a long-term perspective, saying, 'We're urging the Omani government to fund detailed research into which products consistently faced high US tariffs, even under the Biden administration – sectors likely to remain protected even if political leadership in Washington changes. No investor will relocate operations for a temporary advantage. Oman needs to focus on durable sectors where US tariffs are likely to persist, regardless of who's in office three years from now.'