By: Mahmoud Gamal
Abu Dhabi – Mubasher: The UAE’s economy and its local bourses were not likely to be impacted by US President Donald Trump’s widely-argued plan to impose customs duties on steel imports by 25% and aluminum by 10%, economists told Mubasher.
Slight impact
Imposing customs on steel is likely to have a feeble impact on the UAE’s economy as the US is not the largest destination for the UAE’s steel exports, economic analyst and former CEO of Adaa Financial Services Ali Elhamodi commented.
The UAE’s exports to the US jumped 31% to AED 15.86 billion ($4.3 billion) during 2017 from AED 12.3 billion ($3.35 billion) the year before, data released by the American Statistical Association (ASA) showed.
However, international stock markets and global trade may be impacted if the same procedures were applied by China, the European Union (EU), and other nations, Elhamodi added.
If European countries and China took similar measures, in response to Trump’s decree, this will hinder global economic growth, putting pressure on basic materials, especially oil, the analyst told Mubasher.
By the end of last week, the UAE’s two bourses suffered sharp declines, with the Dubai Financial Market (DFM) falling 1.6% to 3,157.45 points, while the Abu Dhabi Securities Exchange (ADX) dropped 1.5%.
Secondary partner
UAE firms are secondary partners to the EU and China. Moreover, the Gulf country’s steel and aluminum imports from the US are not large, economic expert Mohamed Mahdy Abdelnabi told Mubasher.
He noted, however, that UAE firms were more likely to suffer a negative impact of similar measures were imposed on petrochemical products or if the price of petrochemicals, used in the manufacture of steel and aluminum, were to increase, indicating that the consumer would incur price difference.
Emirates Steel noted previously that Trump’s decision to impose tariffs on steel imports entering the US would not have a major impact on the company, which exports its products to other markets and has ambitious expansion plans.
Trade war
Trump’s decision to impose selective tariffs on steel and aluminum imports will, theoretically, lead to a trade war between China and the US on the one hand and the EU and the US on the other, according to Abdelnabi.
EGA profits
Menacorp managing director of asset management Tariq Qaqish concurred that the UAE economy was not likely to suffer a major impact from the tariffs, noting that the UAE ranked fourth in terms of aluminum production.
Local UAE bourses are unlikely to be impacted by the decision as well, he said, but noted that Emirates Global Aluminum’s (EGA) profits may be the ones impacted by these tariffs.
The US market currently makes up 18% or 450,000 tonnes of EGA’s annual production, EGA managing director and CEO Abdulla Jassem Kalban said previously, confirming that his company would continue supplying the US market with high quality aluminum products to meet manufacturers’ needs.
On Thursday, Trump officially imposed 25% tariffs on steel imports and 10% on aluminum.
The following day the EU criticised the decision and hoped that European countries would be exempted from these tariffs.
