The Middle East’s poorer countries have been struggling with warped, barely functioning economies for decades. Jordanians and Egyptians watched Southeast Asia develop manufacturing industries that lifted millions out of poverty, whereas they withered under bloated governments, layers of red tape and an elite engaged in rent-seeking.
Donald Trump’s decision to tear up the global trading system on Wednesday with a torrent of tariffs is, therefore, being met with a mixed reaction in these countries. “We have lived through all this before. It’s not new for us,” an Egyptian paper manufacturer who wished to remain anonymous, told Middle East Eye. “You could even say we have an advantage now because everyone else just got more expensive.”
Indeed, countries like Vietnam and Cambodia were slapped with 46 percent and 49 percent tariffs, respectively. Because the Trump administration calculated its tariff rate based on the difference between how much stuff the US buys from and sells to its trading partners, cheap manufacturing powerhouses that had their acts together got hit hardest.
Countries like Jordan and Egypt have been trying to get into the game of low-skilled manufacturing for years but have been outcompeted by Southeast Asia. Although all countries will feel the sting if Trump’s tariffs spark a global recession, some sniff out an opportunity in a chaotic new world.
“The Southeast Asian tariffs are the ones that will make a difference for Egypt and the Middle East,” Hisham Fahmy, the CEO of the American Chamber of Commerce in Egypt, told Middle East Eye.
“This is absolutely a boost for Egypt’s garment industry. One of the main exporters just sent me a message saying this is good for us, but we have to see.”
Egypt was hit with just a 10 percent tariff rate, the lowest baseline introduced by the Trump administration.
‘Trump just made it easier for Egypt’
On the surface, Egypt doesn’t have much to attract industrialists.
Its economy is in a crisis, having been decimated by inflation and successive currency devaluations. The drop in the Egyptian pound’s value has made importing raw materials more costly for Egyptian manufacturers, and the country has been suffering from electricity rationing.
Egypt’s exports to the US have never been that impressive. Garments and textiles make up 51 percent of its total exports. Iron and steel come in next at barely nine percent.
But experts say that in Trump’s world, all Egypt needs to do is be cheaper than Southeast Asia in low-skilled manufacturing. The prime example is the garment industry, which is fairly mobile and requires relatively little up-front investment.
“Trump has just made it easier for Egypt, with all our corruption and more expensive labor costs to compete with Asia,” the paper manufacturer told MEE.
