GCC economies ramp on resilience in a tariff-fixated global economy

Trade protectionism, once perceived as a short-term pivot in US foreign policy, has increasingly become a structural feature of global economic dynamics.

Catalyzed by the Trump administration’s introduction of sweeping tariffs in 2018 and reignited by the recent 2025 tariff escalation between the US and China, the trend has left a lasting imprint on global trade architecture. For GCC countries, the effects of this shift, while indirect, are deeply consequential.

The initial phase of US tariffs under President Donald Trump included Section 232 duties on steel and aluminum, followed by Section 301 tariffs targeting Chinese imports. These actions triggered a domino effect across global markets, leading to retaliatory tariffs, disruptions in supply chains, and a reevaluation of trade flows.

Though GCC states were not direct targets, their role as export-oriented economies and vital logistics hubs placed them squarely within the impact zone. The newly announced 145% US tariff on Chinese goods, and China’s reciprocal 125% tariff, have only intensified the need for strategic policy responses across the Gulf.

In the metals sector, key GCC exporters such as Emirates Global Aluminium (UAE) and Aluminium Bahrain (Alba) were initially shielded by temporary exemptions. However, long-term uncertainty surrounding renewals, quotas, and shifting US trade preferences forced both companies to diversify their client bases, renegotiate export contracts, and explore new markets.

Similarly, Saudi Arabia’s SABIC recalibrated its industrial strategy, adapting to volatile downstream demand in global metals and petrochemical segments.

The region’s role as a re-export and logistics gateway has also come under increasing pressure. Ports such as Jebel Ali in the UAE, King Abdulaziz Port in Saudi Arabia, and Hamad Port in Qatar have experienced fluctuations in container volumes and increased scrutiny on cargo origin due to the rerouting of global supply chains.

In response, GCC customs authorities have invested in digital trade infrastructure, origin verification tools, and compliance systems aimed at maintaining operational continuity and trade efficiency.

Energy markets too fell tariff heat

Energy markets, though not directly targeted by tariffs, have nonetheless been affected. Chinese tariffs on US crude and LNG created a vacuum in Asia that Gulf energy producers were quick to fill. National oil companies such as ADNOC, Aramco, and QatarEnergy capitalized on this opportunity by strengthening long-term agreements with Asian importers.

At the same time, they are expanding downstream refining and petrochemical operations to add domestic value and hedge against market volatility.

The GCC’s response to these developments has been comprehensive and policy-driven. Trade diversification has taken center stage, with the UAE aggressively advancing its Comprehensive Economic Partnership Agreements (CEPAs) with India, Indonesia, Turkey, and other high-growth economies.

These agreements reduce tariff exposure and open new avenues for investment and export growth. Saudi Arabia and Oman, under Vision 2030 and Vision 2040 respectively, are accelerating industrial development strategies to promote local manufacturing, enhance supply chain independence, and reduce external vulnerabilities.

Digitization of customs and logistics is another key pillar of the regional response. Blockchain integration, real-time trade analytics, and paperless clearance platforms are being deployed across GCC ports to future-proof operations against trade disruptions. This modernization not only improves efficiency but also ensures compliance with increasingly complex international trade regulations.

GCC focuses on smoother customs processes

Regionally, the GCC Secretariat is pushing for harmonized customs procedures, standardization of trade documentation, and coordinated economic diplomacy. These efforts aim to transform the bloc into a more integrated and strategically aligned economic zone, capable of responding collectively to global challenges.

Sovereign wealth funds are also playing a pivotal role. Institutions like ADIA, PIF, and Mumtalakat are redirecting capital toward emerging markets in Africa and Asia, supporting infrastructure and trade corridors less affected by tariff volatility.

According to recent commentary from the IMF and World Bank, the GCC’s direct exposure to the latest US-China tariff measures remains low. However, both institutions emphasize that the indirect effects, rising compliance costs, shifting investment patterns, and realignment of trade routes, are significant and demand long-term policy adaptation. With global trade expected to remain volatile ahead of the 2028 US election, maintaining strategic flexibility is essential.

Looking ahead, the GCC’s priorities are clear: strengthen regional value chains, invest in advanced manufacturing, expand diplomatic trade ties, and reinforce logistics infrastructure. In doing so, the Gulf states are positioning themselves not merely as passive observers of global trade tensions but as proactive, agile players capable of shaping a new equilibrium.

As the world becomes more fragmented, the GCC is building resilience and relevance at the crossroads of East and West.