RIYADH: Arab countries could see up to $22 billion in non-oil exports affected by sweeping new US tariffs, with six economies facing the most direct disruption, according to a new analysis.
A report by the UN Economic and Social Commission for Western Asia said the measures, imposed on April 2, include a blanket 10 percent tariff on nearly all imports, with rates climbing as high as 42 percent for countries with trade surpluses.
While oil remains exempt, the duties now cover a broad range of industrial goods such as textiles, fertilizers, aluminium and electronics, effectively nullifying trade preferences previously granted to Bahrain, Jordan, Morocco and Oman.
ESCWA said that exports from Bahrain, Egypt, Jordan, Lebanon, Morocco and Tunisia are expected to be “significantly affected by the new tariff hikes,” with Jordan facing the highest exposure due to its reliance on the US market.
“A country having a higher share of non-oil exports to the United States is expected to be directly impacted,” the report stated.
“The direct impact is particularly high for countries where exports to the United States constitute a major share of their total global exports.”
While some Arab countries like Egypt and Morocco initially appeared well-positioned to benefit from trade diversion away from heavily tariffed economies like China and India, that potential has faded following a policy shift by Washington.
“With the pause announced on 9 April for most countries, excluding China, the trade diversion effect in favor of most Arab countries is likely to disappear,” ESCWA noted.
ESCWA noted that the impact will vary considerably across the region. Five other countries — Algeria, Oman, Qatar, Saudi Arabia, and the UAE — are likely to see smaller effects, while eleven Arab countries are projected to experience negligible exposure due to limited or no exports to the US.
These include Iraq, Kuwait, and Libya, as well as several least developed countries such as Somalia, Sudan, and the Comoros.
While direct trade impacts will be concentrated among a handful of countries, the broader Arab region may still suffer from indirect effects tied to global demand conditions.
ESCWA warned that reduced consumption from key partners such as China and the EU — both major buyers of Arab goods — could negatively affect export performance across the board.
The EU accounts for 72 percent of Tunisia’s exports and 68 percent of Morocco’s, while China purchases 22 percent of the GCC’s oil and chemicals.
Preliminary macroeconomic modeling for 2025 indicates moderate net impacts for the Agadir Agreement countries — Egypt, Jordan, Morocco and Tunisia.
These nations are expected to see declines in gross domestic product, exports and investment, though some mitigation may occur through limited trade redirection.
GCC economies, by contrast, are projected to experience a smaller aggregate effect, with real GDP declining slightly.
However, the report suggests that losses in oil revenue, tied to falling prices and reduced global demand, could weigh more heavily on fiscal outcomes.
The simulation assumes full implementation of the April 2 US tariffs and corresponding retaliatory measures from China announced on April 5.
Based on this scenario, real GDP in the Agadir countries is projected to fall by 0.41 percent, exports by 1.41 percent, and total investment by 0.38 percent.
The GCC region is expected to register a GDP loss of just 0.10 percent, reflecting lower exposure to US tariffs but higher vulnerability to oil market fluctuations.
The fiscal dimension of the shock is also becoming more apparent. Rising global uncertainty has already driven up borrowing costs for many Arab economies.
Between April 2 and April 9, 10-year bond yields increased by 36 basis points in Arab middle-income countries and by 32 basis points in the GCC.
The impact is particularly acute in debt-heavy MICs. ESCWA estimates that Egypt will face an additional $56 million in interest payments in 2025, Morocco $39 million, Jordan $14 million, and Tunisia $5 million.
These increases, while modest in dollar terms, represent a non-trivial strain on public finances.
The Arab region’s trade relationship with the US has already been weakening. Total exports from Arab countries to the US dropped from $91 billion in 2013 to $48 billion in 2024, primarily due to the decline in American crude oil imports.
However, non-oil exports have grown steadily, from $14 billion in 2013 to $22 billion last year, underscoring the increasing relevance of industrial and value-added goods in Arab export profiles.
In light of these developments, ESCWA is urging Arab governments to respond with coordinated policy actions.
Recommended measures include accelerating regional economic integration, pursuing carve-outs under existing trade agreements, and recalibrating free trade arrangements to avoid preference erosion.
The agency also emphasized the need for countries to strengthen fiscal buffers and diversify trade and investment partnerships.
As the geopolitical and trade environment grows more uncertain, Arab economies are being advised to prepare for continued volatility.
“Arab countries must recognize the diverse, and sometimes contradictory effects of the United States tariff escalation,” ESCWA stated, warning that policy inaction could expose vulnerable economies to prolonged disruptions.
