UAE to have least impact from proposed US tariffs, says S&P Global
25 Apr 2025 20:53
A. SREENIVASA REDDY (ABU DHABI) The UAE is expected to be among the least affected by the upcoming US tariff regime set to take effect after a 90-day pause announced on April 9, 2025, according to an assessment by S&P Global Market Intelligence.Under the new rules, all imports from the UAE to the US will be subject to a flat 10% tariff. However, this will have minimal impact since aluminum—UAE's largest non-oil export to the US—has already been subject to a 10% tariff since 2018 under Section 232 of the US Trade Expansion Act. In 2024, aluminum accounted for 15% of total US imports from the UAE, a segment that remains unaffected.Moreover, US energy imports are exempt from the new tariffs, and when combined with aluminum, these two product categories represent about 40% of total UAE exports to the US. This insulation from the harshest effects of the tariff regime gives the UAE a strategic advantage as global trade tensions rise.S&P also pointed to broader macroeconomic benefits for the UAE stemming from currency dynamics. With the US dollar weakening in response to the tariff announcement, the UAE dirham—pegged to the dollar—has also depreciated, improving the cost-competitiveness of UAE exports in non-dollar markets. 'The upside is the competitiveness of the local production will be improving,' the report stated.Monetary policy trends could also work in the UAE's favour. Should the US Federal Reserve pivot toward growth-oriented policies and cut rates in 2025 and 2026, the GCC countries, including the UAE, are likely to follow suit due to their currency pegs. Lower interest rates in the region are expected to stimulate private sector investment and spending, leading to potential upward revisions in growth forecasts.In a shifting trade landscape, UAE could also benefit from trade and investment diversion. As US firms seek to circumvent retaliatory tariffs from countries like China, they may look to establish production or distribution hubs in the GCC. 'The UAE, which has a well-developed trade and infrastructure network, could be a prime beneficiary of this development,' the report said.Despite the favourable position, S&P warned of some downside risks the GCC countries. Chief among them is the impact of lower oil prices. S&P forecasts Brent crude to average $73 per barrel in 2025 and $69 in 2026, reflecting softer global demand. 'Weaker oil prices will likely force governments to revise their investment spending plans or increase borrowing plans, which will have knock-on effects on growth forecasts,' the report noted.In addition, the weakening US dollar, which lost nearly 10% to the euro and yen and about 7% to the pound between late February and April 23, will increase the cost of goods imports into the GCC and depress the value of dollar-denominated assets. As a result, inflation is expected to accelerate modestly in the GCC countries during the second and third quarters of 2025.
Still, S&P's overall assessment suggests that, relative to its regional peers, the UAE is better positioned to absorb the fallout and may even stand to gain in some areas as the global tariff conflict unfolds.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Al Etihad
10 hours ago
- Al Etihad
Wall Street slips after Trump's steel tariff threat
2 June 2025 19:04 NEW YORK (REUTERS)Wall Street's main indexes dipped on Monday after President Donald Trump said he plans to double tariffs on imported steel and aluminum, fueling more uncertainty around U.S. trade said late on Friday he planned to increase tariffs on imported steel and aluminum to 50% from 25% starting Wednesday, just hours after he accused China of violating an of U.S. steel companies rose, with Cleveland-Cliffs jumping 28.3%, Nucor up 11.5% and Steel Dynamics 11.3% shares of automakers fell. Ford and General Motors both were down more than 4%."People have been thinking about that (steel tariffs) and trying to formulate the economic impact. It presents the markets with a lot of uncertainty right now," said Peter Andersen, founder at Andersen Capital increased levies risk deepening Trump's global trade war, and dousing enthusiasm in markets stemming from the U.S. president's softer trade stance that drove a recovery in risky assets last month.A temporary relief on some levies on China and a rollback of steep tariff threats on the European Union, along with strong earnings and improving economic picture helped the benchmark S&P 500 log its best monthly performance in 18 months in fueling risk-off moves in global markets, Kyiv struck some of Moscow's nuclear-capable bombers on Sunday, renewing concerns around further escalation of the 10:31 a.m. ET, the Dow Jones Industrial Average fell 208.46 points, or 0.49%, to 42,061.61, the S&P 500 lost 15.78 points, or 0.27%, to 5,895.91 and the Nasdaq Composite lost 10.10 points, or 0.05%, to 19, of the 11 major S&P 500 sub-sectors fell, with consumer discretionary stocks declining the most with an about 1% fall. On the flip side, energy rose 0.8% tracking a rise in oil prices.U.S.-listed energy stocks advanced after producer group OPEC+ kept output increases in July at the same level as the previous two megacap and growth stocks were down, with Tesla leading losses with a 2.5% decline after it reported lower monthly sales for Portugal, Denmark and the economic front, the Institute for Supply Management's (ISM) gauge of manufacturing activity came in at 48.5 for May, below estimates of 49.3, according to economists polled by will be on comments from Federal Reserve Chair Jerome Powell later in the day as he presents opening remarks before the Federal Reserve Board International Finance Division's 75th anniversary conference at 1:00 p.m. ET (1700 GMT).Investors are also looking ahead to a crucial nonfarm-payrolls report on Friday to gauge the U.S. labour market's strength amid tariff issues outnumbered advancers by a 1.84-to-1 ratio on the NYSE and by a 1.43-to-1 ratio on the Nasdaq. The S&P 500 posted 10 new 52-week highs and four new lows, while the Nasdaq Composite recorded 51 new highs and 63 new lows. Stock Markets Continue full coverage
Zawya
14 hours ago
- Zawya
Kuwait poised for heavy borrowing in 2025-2028
Kuwait is expected to be among the largest regional borrowers in the next few years to bridge its widening fiscal gap due to low oil prices and massive allocations for public servants wages and social spending. During 2025-2028, the deficit in the budgets of the Gulf OPEC oil producer is expected to swell sharply from its relatively low level in 2024, the US rating agency S&P said. In a report this week, the agency said the deficit, driven by lower crude income and high public spending, is projected to account for an average 8.9 percent during that period. The shortfall could surge to nearly 14 percent in the current fiscal year 2025-2026, which started on 1 April, up from just two percent in 2024, it said. The agency did not provide deficit figures but Kuwait's GDP stood at around $163 billion in 2024 and is forecast to rise by one-four percent in the next three years barring unexpected developments in the oil market, according to National Bank of Kuwait (NBK). This means GDP could range between $165 billion and $170 billion, with the budget deficit averaging around $15 billion during that period. 'Kuwait and other Gulf countries are following a strategy to maintain a huge financial cushion to maintain their strong credit rating,' Saudi economist Ihsan Buhlaiga told Zawya Projects. 'This is demonstrated in their intensified efforts to build up their overseas assets, mainly those of their sovereign wealth funds…this means whenever there is a budget deficit, they will fund it through borrowing rather than withdrawing from those assets.' Kuwaiti officials said last week the Gulf state could borrow $10-20 billion during 2025-2026 to cover the deficit following the approval of a debt law in March. Zawya reported last week that Kuwait could issue its debut debt tranche very soon after the government cleared the country's multi-billion sovereign wealth fund, and the central bank to borrow funds. Analysts said borrowing could gain momentum in the following years if oil prices remain below the $70 price assumed by Kuwait in its budgets and given the relatively small revenues from other sources. Kuwait has also been unable to trim spending as more than two thirds of the expenditure is allocated for wages and subsidies, which cannot be cut. Finance Ministry figures showed non-oil revenues would provide only around KWD2.6 billion ($8.5 billion) of the 2025-2025 budgeted revenues of KWD18.9 billion ($62 billion). The figures also showed salaries would eat up KWD14.8 billion ($49 billion) of the budgeted spending of about KWD24.5 billion ($81 billion), nearly 60 percent. Allocations for subsidies were set at KWD4.5 billion ($14.8 billion), nearly 18 percent of the total. NBK said in a recent report that Kuwait was forced to cut capital spending by around 1.7 percent in the 2025-2026 budget while allocations for wages to public servants and social aid to citizens swelled by nearly 9.1 percent over the previous budget. 'The decline in capital expenditure represents a continuation of a downward trend in such spending over the past four years despite the pressing need for funding infrastructure projects in line with Vision 2035,' the report said. Kuwaiti officials said last week that borrowing this year would be used mainly to fund infrastructure projects with a value of more than $7 billion. (Reporting by Nadim Kawach; Editing by Anoop Menon) (
Al Etihad
18 hours ago
- Al Etihad
Over 1% FAB shares sold in bulk transactions
2 June 2025 11:28 A. SREENIVASA REDDY (ABU DHABI)The Abu Dhabi Securities Exchange (ADX) on Monday reported large-scale bulk transactions involving shares of First Abu Dhabi Bank (FAB), the UAE's largest bank.A total of 113.356 million shares, valued at Dh1.757 billion, were traded across 32 transactions at an average price of Dh15.5 — a slight discount compared to FAB's closing price of Dh16.1 on Friday. The number of shares traded constitutes slightly above 1% of total shares of 11.047 billion. International wire agencies reported a big secondary sale of FAB shares on Friday, quoting Citi, which is said to be the bookrunner for the deal.'The selling shareholder, whose name was not disclosed, is offering around 113 million shares at a price of Dh15.5 per share through an accelerated bookbuilding,' Reuters said, quoting a Citi reported total assets of Dh1.31 trillion as of the end of March, while its market capitalisation currently stands at Dh174 billion, according to the latest data available from information published on FAB's official website, as of March 31, 2025, shows that Mubadala Investment Company holds the largest stake at 37.9%, followed by Abu Dhabi's ruling family (18%), and other UAE entities and individuals (21.7%). Foreign ownership accounts for 22.4%, while the free float — the proportion of shares available for trading on public markets — is listed at 42%. Stock Markets Continue full coverage
