Insights: GCC, tariffs and the new world trade order
Against the backdrop, public and private-sector decision makers in the GCC must think strategically and leverage their stability and strengths to prepare for the new-look future
02 June, 2025
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As Donald Trump passes the 100-day milestone of his second term as President of the US, the US Administration’s take on immigration, government bureaucracy, and the future of energy have all made front-page news. It is the topic of tariffs, however, that is compelling businesses and policymakers to turn headlines into action.
Back in April, the US announced a baseline tariff of 10 per cent on almost all imports into the country.
According to The White House, the move was intended to protect American jobs, American manufacturing, and the American economy at large. In the process, it has triggered a global rethink among governments over how to protect national interests of their own.
For the GCC, the direct impact of the new tariffs is relatively low. Between 2014 and 2022, the US share of GCC’s exports ranged between just 3 per cent and 6 per cent. What’s more, the region’s stability, strong energy exports, and sovereign wealth all combine to limit potential damage. Still, with seismic shifts underway globally, now is the time for the GCC to explore fresh avenues for collaboration, investment, and growth.
This preparation will require a multifaceted approach, including a mix of strategic thinking, business transformation, policy support, and assessment of the risks and opportunities ahead.
Trade in the time of Trump’s tariffs: Thinking strategically
Since the new US tariffs were announced, they have been imposed, modified, and paused multiple times. Yet, behind the uncertainty is a hard fact: the nature of trade is changing and there may be no going back. Already, long-standing multilateral arrangements are being replaced by bi-lateral deals, global investments are being redistributed, and supply chains are being broken down and rebuilt. Against this backdrop, public and private-sector decision makers in the GCC must think strategically and leverage their stability and strengths to prepare for the new-look future.
For policy makers: It is important to establish new strategic bilateral agreements with entities and conclude ongoing negotiations. This must be done in a way that both safeguards local industries and secures a place for the GCC in global supply chains.
The recent bi-lateral agreement between the US and UK serves as a useful example. On May 8, the US and UK announced a new deal, with tariffs on cars exported to the US from the UK being significantly reduced and the 25 per cent tariff on UK steel and aluminum scrapped altogether. Meanwhile, the US will have preferential access to UK aerospace components. It should be noted, however, that the initial 10 per cent tariff rate applied to the UK remains in place.
For businesses: There is now an opportunity to explore new markets, identify ways to integrate into the transforming global supply chains, pursue international partnerships and acquisitions or invest in overseas assets under new or improved conditions.
Meanwhile, corporations and governments alike can leverage the midterm benefits of shifting trade dynamics to facilitate the acquisition of technologies and purchase products at lower cost.
No room for complacency
The GCC is well placed to thrive in a new trade order, but it should remain vigilant for risks and opportunities on the horizon. One obvious focus area is energy, with the current trade uncertainty placing oil prices under short-term pressure. In a context of lower prices, GCC governments are likely to reconsider their spending plans while remaining poised to seize opportunities as they arise. Similarly, businesses in the region may need to update their business plans accordingly.
On the topic of spending, currency recalibration and dollar depreciation could lead to a reduction of purchasing power – yet it could increase GCC competitiveness too. The region’s trading position could also be aided by an easing in international competition, albeit brief, which may yield attractive deals in the form of favorable contracts or cheaper goods.
As the region weighs up the potential scenarios, it will be essential for public- and private-sector organizations to carefully assess the landscape.
For policymakers: Monitoring trade risks and applying the necessary safeguards are crucial tasks. Revision of monetary and labor policies can also help to balance the social and economic impacts of the new dynamics of global trade and global economy dynamics.
For businesses: A thorough assessment of the mid-term risks and opportunities, supported by sophisticated scenario-based thinking, is essential. This assessment should explore the potential for both increased competition and new market attractiveness, and provide answers to key questions across various possible scenarios : What better deals can we secure? What opportunities should we invest in? And what costs might arise along the way?’
Take a chance on transformation
As with disruption to any status quo, the new US import tariffs present economies the world over with formidable challenges – but there are opportunities for the taking too. For companies across the GCC, this period of flux offers the chance to build strategic resilience and increase the potential for growth.
For many organisations, seizing that chance requires more than surface-level change; it demands fundamental transformation. That means building new capabilities, entering new partnerships, and getting up to speed with changes on the ground, ready to seize fresh opportunities. Scenario-based analysis (taking into account various possible futures and thinking multi-optionally), as well as speed of decision-making, agility in implementation, and organizational responsiveness, are now essential parts of the strategic toolkit.
Right now, those opportunities could emerge from anywhere. With almost no industry or geography immune to the tides of change, new overseas investment and M&A prospects could rise to the surface. Meanwhile top talent is likely to be on the lookout for different, more stable positions both at home and abroad, offering GCC businesses a valuable chance to ramp up their capabilities.
From securing talent to signing deals, first-mover advantage will be key.
Think policy
As the region’s businesses step bravely into this new future, policymakers have a vital supporting role to play. Here, international dealmaking will be paramount – a skill that GCC governments have mastered over time, as evidenced by their lineup of alliances and bi-lateral trade agreements, and steady stream of FDI.
Policymakers can also support businesses across industries through targeted incentive schemes and regulation designed to positively impact international trade and give GCC companies a competitive edge.
The playbook of global trade is being rewritten. There are challenges ahead, but the GCC has a unique opportunity to pen a new chapter of its own.
The writer is a partner, Energy and Utilities at Arthur D. Little Middle East.
