The fight over high tariff rates imposed by US President Donald Trump is showing no signs of decreasing. The US trade court blocked Trump's tariff decision, ruling it unlawful. President Trump is seen in a new style in his second term. Many countries criticise the US president over the unnecessary tariff rates. Although no tariffs are imposed in some states, they still have a worldwide effect nonetheless. For any trade-dependent state like Dubai, the consequences can be severe regarding location and ports. As a major re-export centre, Dubai is closely tied to international markets. Therefore, changes to trade rules or costs will have a significant impact on many traders in this area.
The new tariff policy starts at 10% and increases to 145%. China has been affected the most in comparison with other countries. These measures have severely impacted the automobile, Semiconductor, and Pharmaceutical sectors.
It is said that amid these types of disruptions, other countries start to emerge and play on the front foot, and the UAE is one of them. As we know, the UAE is already a thriving country and continues to boom every day. These decisions can help cities like Dubai achieve even greater success.
Advantage in Disruption
Global supply chains have frequently been reorganised as trade barriers rise. History is a testament to the fact that when a strong economy experiences fluctuations, other economies step in to offer greater connectivity, faster market routes, and a more flexible set of policies.
Dubai is a real-time example to explain this situation. Its world-class infrastructure, business-friendly policies, and long-standing reputation as a global logistics hub are increasingly positioning it as a strategic alternative for businesses dealing with rising costs in China and the United States.
Direct Consequences on the Businesses in Dubai
Many business entities in Dubai export equipment, petrochemicals, and aluminium to the United States. Due to a 10% tariff, the price is uncompetitive. Both scenarios have the effect of reducing profits for the businesses.
Additionally, the supply networks may experience delays. Companies in Dubai will usually utilise components or raw materials imported from other countries. Problems in production and delivery occur if tariffs or delays are placed on such parts.
Rising expenses for manufacturers also exist in Dubai. Production costs increase when raw materials are subject to tariffs. This, in turn, affects price and profit margins.
Indirect economic impacts on Dubai
Tariffs bring momentary consequences to set industries. Global uncertainty has been a factor in the decline of the US dollar's value. Since the value of the UAE dirham is linked to the US dollar, its value may fluctuate. Thus, purchasing power may differ for the local companies and customers.
Then, an increase in inflation may be witnessed. This would cause the prices of items in local stores to rise to match those of imported items. As such, general items like cars and gadgets would be experiencing price hikes.
Investor confidence may also decline. International investors are forever on the lookout for the safest investment choices. In a city like Dubai, increasingly shaky trade laws may be responsible for some delays or outright cuts in investments.
Prospects Presented by Tariffs
On the contrary, Dubai may find new pathways for growth despite the tariff barriers. Increasing the activities related to re-export is one such opportunity. Vendors otherwise lose time and money shipping goods subject to high tariffs in one country via Dubai to another country in the same zone.
Furthermore, Dubai can attract foreign investors by offering a safer and more secure environment in which to conduct their business. The lucrative corporate laws, robust infrastructure, and cheap tax regime make Dubai very attractive to them.
How can Markai Corporate Services help?
In this international trade and tariff war, we help you stay strong with the best strategies and guidance. Our team of experts not only guides your business but also ensures a positive and seamless transition during global market changes. If you are seeking the best business solution consultants, look no further than Markai Corporate Services.
