Kuwait & Trump’s 2025 Tariffs: Impact on Local Economy & GCC

Have you noticed how sometimes a big decision made halfway around the world can shake things right here in Kuwait? Recently, U.S. President Donald Trump announced a fresh wave of 2025 tariffs, and even though Kuwait isn’t the primary target, we will be feeling the effects across oil revenues, construction costs, and overall trade flows. Let’s break down what’s new, examine how older tariffs impacted us, and discuss what this means for businesses and everyday life in Kuwait.

Quick Overview: Trump’s 2025 Tariffs

On April 3, 2025, The Guardian published a detailed list of newly announced tariffs affecting metals, consumer electronics, and various imports from Asia and Europe. Around the same time, Forbes and the BBC reported that Trump labeled them “reciprocal tariffs,” adding higher duties. Some are rising to 30% on steel and aluminum imports from countries he claims “aren’t dealing fairly with the U.S.”

If you’re thinking, “Didn’t this happen back in 2018?” you’re not wrong. Back then, the tariffs were 25% for steel and 10% for aluminum. Now, these 2025 tariffs increase those rates in specific categories and expand to more goods like auto parts and electronics. Kuwait Times refers to them as a “global tariff bomb,” signaling a round of potential disruptions for economies big and small.

How Do These 2025 Tariffs Affect Kuwait?

1. Oil Exports and Budget Pressures

Kuwait’s biggest export to the U.S. has always been crude oil. Our economy depends on hydrocarbons for about 90% of its export earnings. While Trump’s tariffs still don’t directly target oil, the new trade barriers can slow global growth. Slower growth means less demand for oil, an effect we’ve seen before.

Kuwait & Trump’s 2025 Tariffs: Impact on Local Economy & GCC

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• 2019: When the first wave of tariffs peaked, oil prices dipped below $60/barrel amid the U.S.–China trade war.

• 2022–2023: Oil rebounded above $80/barrel at times but then fluctuated due to ongoing trade tensions and pandemic aftershocks.
• Now (2025): Economists warn that renewed tariff wars could push prices down again if global manufacturing slows.

Kamel Al-Harami, the Kuwaiti oil analyst from the Arab Times, who once said, “Any global slowdown means less demand for oil; it hurts us more than people realize”?

2. Imports from the U.S. Cars, Machinery, and More

We often focus on oil, but Kuwait also imports billions of dollars worth of machinery, vehicles, and technology from America each year. Check out our year-by-year snapshot below (goods only, approximate USD values based on U.S. Census Bureau and ITA data):

Many U.S. manufacturers now face higher input costs (steel, aluminum) and fresh trade disputes so that they may pass those cost increases on to global buyers, including Kuwait. Will this make cars and machinery more expensive here? Quite possibly. Several Kuwaiti auto dealers told Times Kuwait they’re bracing for mid-year price hikes if the increased steel tariffs persist.

3. Kuwaiti Exports: Mostly Oil, Some Non-Oil

On our side, we sell roughly $1–$2 billion of goods to the U.S. each year, 90–95% of which is oil. The rest includes petrochemicals, fertilizers, and occasional niche products like specialty plastics. The table below sums up data from US International Trade Administration:

We remain indirectly vulnerable because oil isn’t officially tariffed by the U.S. even in 2025. That’s the tricky part: if the global economy slows, so does oil demand, and that’s where Kuwait feels it the most.

The GCC Angle: Who’s Hit the Hardest?

We’re part of the Gulf Cooperation Council, so how is the rest of the GCC doing in 2025 with these new tariffs?

• Saudi Arabia is the biggest oil exporter in the GCC and also supplies petrochemicals to the U.S. Slower global growth could mean a more pronounced revenue dip.
• United Arab Emirates: Exports a lot of aluminum and some steel to the U.S., meaning the original Section 232 tariffs in 2018 already hurt them. The 2025 hikes could make it worse, one of the hardest-hit in the region.
• Qatar Exports LNG rather than oil, so the direct effect might be minor, but it’s still vulnerable to global slowdowns.
• Bahrain: Like the UAE, its aluminum sector took a direct hit; 2025’s higher rates may force it to find alternate markets.
• Oman: Relies on oil, fishing, and light manufacturing. A global trade slowdown could reduce demand across all sectors.

In short, none of the GCC states are celebrating the new tariffs. Each faces challenges, but the core issue is the same: the region’s economies hinge on global demand for energy and metal exports, and these tariffs are shaking the global marketplace again.

Gulf Stock Markets Shed $51.5 Billion

Following President Donald Trump’s announcement of new U.S. tariffs targeting Arab countries, most Arab financial markets experienced steep declines. On Thursday, April 3rd, Gulf stock exchanges saw a collective drop of about $51.5 billion, with Kuwait’s market contributing roughly $500 million. (Note: Qatar and Oman exchanges were closed.) On Sunday, April 6th, the Kuwait stock market lost 2.44KD Billion of its value.

Consequences for Businesses in Kuwait (and the GCC)

1. Higher Import Costs
   
   • Machinery, auto parts, and electronics from the U.S. might see price bumps if American companies pass on their tariff-related costs.
   • Local retailers have already hinted at potential markups in 2025 for certain consumer goods.
2. Volatile Oil Revenues
   
   • If these tariffs slow major economies, Kuwait’s oil revenue could drop. That affects government spending, infrastructure projects, and perhaps job creation in the short term.
3. Supply Chain Shifts
   
   • Some businesses might pivot to alternative suppliers, European or Asian markets, to avoid U.S. cost increases. This can be good (more competition, possibly lower prices) or challenging (quality concerns, shipping logistics).
4. Longer-Term Planning
   
   • With repeated tariffs, Kuwaiti firms are learning to consider trade policy risks. That means more robust contingency planning and possibly more significant inventories to hedge against future disruptions.

As a business owner, you might wonder: “Should I source my components from a U.S. company now? Or look elsewhere?” That’s precisely the conversation many local entrepreneurs are having.

Need Help Navigating Tariffs or Global Trade Shifts? We’re Here.

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At Ali Bahbahani and Partners, our mission is simple: empower Kuwaiti and GCC businesses to thrive, even when global policies throw unexpected challenges your way. We offer a range of services tailored to your needs:

• Policy Analysis: We’ll dissect the latest tariffs and regulations, so you know exactly what costs and risks you’re facing.
• Market Diversification: Are U.S. goods becoming too pricey? Let us help you find reputable suppliers in Europe and Asia or closer to home in the GCC.
• Strategic Advisory: From foreign exchange implications to shipping and customs, our team will guide you through every step of the process.
• Risk Management: Don’t be blindsided by sudden policy changes; we develop contingency plans that stabilize your bottom line.

Ready to protect your business and stay on track?
Contact Ali Bahbahani and Partners today.

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