Trump tariffs may add fuel to UAE’s free trade push
AGBI | 2 July 2025
Trump tariffs may add fuel to UAE’s free trade push
By Valentina Pasquali
The UAE’s pursuit of bilateral trade deals is more important than ever today as US President Donald Trump’s tariffs threaten to upend international commerce as we know it.
In quick succession, the Emirates have completed talks on 27 comprehensive economic partnership agreements (Cepas). Eight of them are in effect, including with India, Turkey and Indonesia.
Fourteen more, such as those with Vietnam, South Korea, Australia and Chile, are signed and awaiting ratification, while another handful, including one with Russia, have been negotiated but not yet signed.
“The network of Cepas offers access to markets with a combined 2.5 billion people,” says Ben Gordon, an associate partner at Albright Stonebridge Group in London. “For multinationals, that makes investing in the UAE a much more attractive option to support global sales.”
The deals also position the UAE as a vital re-export node, he adds.
The emirati cabinet aimed to double re-exports by the end of the decade when they approved 24 trade-focused initiatives in March 2023.
“The approach of compiling a network of bilateral deals… places the UAE at the nexus of trade between many of these markets, allowing countries to route exports to the entire network through the UAE,” Gordon says.
UAE foreign trade rose 14.6 percent in 2024, far above a global average of just 2 percent, according to government data released in February.
The Cepas in effect contributed AED135 billion ($36.8 billion) to non-oil trade with partners, up an “exceptional” 42 percent from 2023, Sheikh Mohammed bin Rashid Al Maktoum, UAE’s vice president and prime minister, noted.
According to Steven Terner, a geopolitical analyst at Terner Consulting in New York, since the UAE-India deal came into force in May 2022, non-oil trade between the two nations has grown 20 percent, while UAE exports to India jumped 75 percent by the end of 2024.
Exchanges with Turkey have grown by 11 percent and those with Indonesia 15 percent since the Cepas went into effect in September 2023, while trade with Georgia is up 56 percent since the deal’s June 2024 effective date, Terner adds.
He calls the UAE’s Cepa with Jordan, which came into effect in May and is the first such deal with an Arab country, “a significant step in regional trade integration.”
Impact of Trump’s tariffs
Meanwhile, Trump’s protectionist approach since he returned to the White House has endangered the increasingly freer flow of goods around the world.
Industry observers do not see any risk the US trade policy turnabout may sway the UAE. In fact, they say it is only going to strengthen the country’s resolve.
According to Hamzeh Al Gaaod, a Mena analyst with TS Lombard in London, local manufacturing is not competitive enough for the Emirates to flirt with serious protectionism. They are net importers of goods outside of fossil fuels and reliant on global trade.
“The UAE’s actual mantra is being a gateway that connects everyone in the world and provides a safe business environment,” Al Gaaod says.
Terner agrees that “global trade policy uncertainty accelerates the UAE’s impetus to broker bilateral free trade agreements” as these can help ensure predictability and access to global markets and act as a “buffer against disruptions.”
UAE leaders on June 20 established a new Ministry of Foreign Trade headed by Thani bin Ahmed Al Zeyoudi, the lead Emirati negotiator on the Cepa push.
Going forward, the agreed-to, but not yet signed deal with Russia has significant potential given the financial flows between the two countries, according to sources. The UAE could also reap big rewards from Cepas with Japan and the European Union, currently under discussion.
“One country people are sort of missing is Brazil,” Al Gaaod says, noting that Gulf nations are racing to lock down reliable supplies of raw materials such as rare earth minerals.
The UAE is expected to clinch a Cepa with the Mercosur block of Argentina, Brazil, Paraguay, Uruguay and Bolivia by the end of this year.
Then there’s the elephant in the room.
“China is a huge trading partner of the UAE, but the UAE is carrying out this balancing act in which they maintain a close economic and diplomatic relationship with China but they don’t attract too much ire from President Trump,” says Andrew Leber, an assistant professor at Tulane University.
“That’s something that they’re probably going to avoid for now, even if the economic case is there.”
