Donald Trump's decision to introduce new customs duties after he took office in January last year has provoked a global reaction, which, as it turned out, was not limited to the Arab community. A report prepared by the Fitch Solutions agency indicates that the primary impact of the new American customs duties will be felt in developing markets with high levels of long-term strain, primarily affecting North Africa, the Middle East, and especially the Gulf countries. However, the report notes that countries with high long-term strain, including Egypt, Lebanon, and Iran, are experiencing more serious consequences due to increased spending on servicing debts in connection with the stabilization of the dollar on the global market.
In part, the strengthening of the dollar will lead to a decrease in the cost of the Egyptian pound, which, in turn, may exacerbate inflationary processes and negatively impact economic activity, especially in conditions of higher interest rates. The report states that the American customs duties will influence Egypt's economic growth due to delayed decreases in interest rates in the USA, which affects foreign investments in long-term instruments of developing markets, including Egypt. It is projected that this may lead to the withdrawal of investors from long-term instruments or the liquidation of part of their portfolios.
The report also emphasizes that these impacts will have a indirect character, with expectations for inflation levels to recover. It is worth noting that U.S. President Donald Trump decided to reduce customs duties to 20% and increase duties on all imported goods from Canada and Mexico to 25%, which should start fully from April 2 of the following year.
