The recently announced US tariffs threaten to redefine economic trajectories across the Middle East and North Africa region, with varying impacts likely across oil exporters and importers, BMI Research reported on April 4.

 

Middle East – US Discounted Reciprocal Tariffs (%)

Source: White House “Reciprocal Tariffs” chart, 2024

Economic analysts expect the tariffs to trigger a significant restructuring of trade relationships throughout the region, with commodity price fluctuations serving as a primary channel of impact beyond direct export effects.

"One of the key channels by which this shift in US policy will affect economies in MENA is, of course, through commodity prices," the BMI report stated, highlighting the broad implications beyond direct trade relationships.

If exemptions persist the impact will be less on MENA countries

MENA – Breakdown Of Exports To The US, % of Total

Country	Oil Exports To US/Total US Exports	Fertilisers	Rubber	Rare Earth Minerals	Organic Chemicals	Iron And Steel	Aluminium	Pharmaceutical Products	Copper	Semiconductors	Electronic Integrated Circuits	Subject To Current Rate
Syria	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	100.0
Lebanon	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	100.0
Iran	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	100.0
Yemen	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	100.0
Tunisia	0.0	5.9	0.1	0.3	0.0	0.5	0.0	1.2	0.0	0.0	0.0	93.0
Jordan	0.0	4.5	0.1	0.5	0.3	0.3	0.0	0.0	0.0	0.0	0.0	91.7
Egypt	0.3	6.6	0.0	0.0	0.0	6.1	0.0	0.0	0.0	0.0	0.0	86.8
Morocco	0.0	10.1	1.1	0.0	0.0	0.0	10.6	0.0	0.0	0.0	0.0	79.1
Oman	4.3	6.6	0.0	1.4	2.4	17.2	0.0	0.0	0.0	0.0	0.0	67.9
Israel	0.9	1.4	0.1	0.1	0.1	8.8	0.1	2.1	2.1	18.8	0.5	65.8
UAE	23.3	0.7	0.0	0.2	16.0	0.0	0.0	0.0	0.0	0.0	0.0	57.2
Qatar	48.4	19.0	0.0	0.0	0.0	9.8	0.0	0.0	0.0	0.0	0.0	22.7
Bahrain	16.3	0.0	0.0	0.0	57.7	6.5	0.0	0.0	0.0	0.0	0.0	19.5
Algeria	81.8	6.9	0.1	0.0	3.1	0.0	0.0	0.0	0.0	0.0	0.0	8.1
Saudi Arabia	81.5	6.0	0.0	0.0	6.0	0.0	0.0	0.0	0.0	0.0	0.0	5.9
Kuwait	96.2	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	3.8
Iraq	99.4	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.6
Libya	99.9	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.1

Note: Trade data for 2024. Total exports are derived from BOP data. Source: US Census Bureau, National Sources, BMI

Forecasts across the region now face significant uncertainty as governments and industries assess their responses to the tariff regime, with BMI confirming that "we will be reviewing all of our forecasts over the next few days as the global and MENA responses become clear."

Jordan faces a particularly challenging outlook with growth expected to fall to 2.1% in 2025 from 2.2% in 2024, alongside an expanding current account deficit reaching 7.4% of GDP.

"The tariffs will lead to an even more pronounced slowdown in Jordan and wider current account deficit," the report stated, though it noted that Jordan might retain some competitive advantages.

Despite these challenges, the 20% tariff rate on Jordanian imports to the US remains lower than most countries exporting similar products, potentially giving Jordan a competitive edge despite the 2010 free trade agreement between the two nations.

"The 20% rate charged on imports from Jordan is lower than almost all countries that export similar products to the US, which could put it at an advantage," BMI analysts wrote.

Tunisia faces greater pressure as its diversified export base to the US will experience broad impacts from the tariffs, further weakening its already fragile external position.

"For Tunisia, given the diversified exports to the US, the US tariffs will exacerbate the pressure on its already weak external position and lead to slower growth than we currently expect at 1.2%," the report explained.

For Israel, prospects appear more promising as the government has eliminated all tariffs on US products. BMI analysts believe that "the Israeli government and the US will reach an agreement to reduce the rate on Israeli exports to the US," creating a more favourable outlook.

Global economists at BMI estimate that full implementation of the proposed tariffs significantly increases the risk of a worldwide recession, which would drive down oil prices and create substantial negative shocks for the region's energy exporters.

"Our Global Team estimates that the current tariffs, if imposed in full would create a significant risk of a global recession. This would push down oil prices and create a major negative shock for the region's energy exporters," the report warned.

The potential oil price decline would benefit MENA's energy importers through reduced import costs and decreased subsidy spending, partially offsetting other economic pressures created by the tariff regime.