KUWAIT CITY, April 3: In light of the implementation of tariffs imposed by the Trump administration on goods imported into the United States – a minimum of 10 percent – similar to those imposed on Kuwaiti exports, the newspaper asked several economists about the repercussions of the decision on the Kuwaiti economy. Specifically, the economists were asked about the extent of the impact of such a decision on the Kuwaiti economy, and if the whole world will witness a price hike wave as a result of the increased tariffs on imports to the United States. Oil analyst and economic expert Kamel Al-Harami believes the global economy will inevitably be affected by the increased tariffs imposed by the United States at varying rates on some countries. He pointed out that “this trend will increase global inflation and, consequently, increase prices; especially since other countries may respond in kind to US President Donald Trump and raise tariffs on imports from the United States.”
After the US raised tariffs by around 10 percent on Kuwaiti imports, Al-Harami stated that Kuwaiti exports to the US are minimal and that the US can raise tariffs on oil and gas; but Trump has yet to raise tariffs on oil imports. He pointed out that while the OPEC+ is concerned with all oil transactions in terms of price and countries’ share, it cannot stop any increase in tariffs on oil and gas by any country like the United States or others. Economic advisor and food security expert Mohammad Al- Furaih said America’s 10 percent tax on Kuwaiti imports, as the case for many countries, may not significantly impact the Kuwaiti economy in the first place, because the percentage of Kuwaiti exports to the US is very small.
“However, the issue related to oil is completely different, as the price of oil is determined by OPEC+, not individual countries,” he added. He stated that Trump’s policy will certainly impact the performance of the global economy, particularly since Trump’s recent policies have led to an increase in the price of an ounce of gold to an unprecedented level -- KD100,000 per kilogram. He explained that Kuwait, like other Gulf Cooperation Council (GCC) countries, already pays five percent in customs duties. “Kuwait has contacted Trump and pointed this out to him, but it appears that he is not listening,” Al-Furaih revealed. Economic expert Khaled Al-Enezi warned that the policies of Trump will negatively affect the global economy, as the world will witness an unprecedented wave of inflation. “Trump’s increase in tariffs of 10 percent on some GCC countries, as a minimum of the new US tariffs imposed on imports to the US, will prompt other countries to raise tariffs on US imports. This will lead to price hikes in most countries and consumers around the world will be the victims of Trump’s actions,” he asserted. He affirmed that the primary loser from Trump’s imposition of these policies is America itself, as most countries around the world will turn to China, which has begun to flood the United States with its products, such that even Chinese mobile phones are sold in America. “In addition, some countries prefer Chinese products over American ones. I used to be reluctant to drive Chinese cars, but now I own five Chinese- made vehicles,” he disclosed. He also noted that during the Coronavirus pandemic, the cost of transportation fees on imports increased, and the container price for Chinese imports was raised from KD 300 to KD800. “Despite this, Chinese products are preferred over other products, especially since their prices are much lower than those of American and European products,” he elaborated. Kuwaiti economic expert Najib Al-Saleh confirmed that the country’s exports to the United States are limited; which means the economies of the region, including Kuwait, will not be affected by the recent tariff decisions of Trump. Al-Saleh told the newspaper “as per my understanding of the recent US decision to impose unprecedented tariffs on imported goods, I believe such a decision entails America’s withdrawal from the leadership role it assumed after the fall of the Soviet Union in the early 1990s. Without a doubt, this decision will hurt the global economy, given the size of the US market. However, I think the main beneficiary of this decision in the short and medium terms will be the American citizens.” Meanwhile, financial markets around the world are reeling Thursday following US President Donald Trump’s latest and most severe volley of tariffs, and the U.S. stock market may be taking the worst of it. The S&P 500 was down 3.3% in early trading, worse than the drops for other major stock markets. The Dow Jones Industrial Average was down 1,204 points, or 2.9%, as of 9:50 a.m. Eastern time, and the Nasdaq composite was 4.3% lower.
Little was spared as fear flared globally about the potentially toxic mix of higher inflation and weakening economic growth that tariffs can create. Prices fell for everything from crude oil to Big Tech stocks to small companies that invest only in U.S. real estate. Even gold, which has hit records recently as investors sought something safer to own, pulled lower. The value of the U.S. dollar also slid against other currencies, including the euro and Canadian dollar. Investors worldwide knew Trump was going to announce a sweeping set of tariffs late Wednesday, and fears surrounding it had already pulled the S&P 500 10% below its all-time high last month. But Trump still managed to surprise them with “the worst case scenario for tariffs,” according to Mary Ann Bartels, chief investment officer at Sanctuary Wealth.
Trump announced a minimum tariff of 10% on imports, with the tax rate running much higher on products from certain countries like China and those from the European Union. It’s “plausible” the tariffs altogether, which would rival levels unseen in roughly a century, could knock down U.S. economic growth by 2 percentage points this year and raise inflation close to 5%, according to UBS. Such a hit would be so frightening that it “makes one’s rational mind regard the possibility of them sticking as low,” according to Bhanu Baweja and other strategists at UBS. Wall Street had long assumed Trump would use tariffs merely as a tool for negotiations with other countries, rather than as a long-term policy. But Wednesday’s announcement may suggest Trump sees tariffs more as helping to solve an ideological goal - wresting manufacturing jobs back to the United States, for example - than just an opening bet in a poker game. If Trump follows through on his tariffs, stock prices may need to fall much more than 10% from their alltime high to reflect the global recession that could follow, along with the hit to profits that U.S. companies could take because of them. “Markets may be underreacting, especially if these rates turn out to be final, given the potential knock-on effects to global consumption and trade,” said Sean Sun, portfolio manager at Thornburg Investment Management, though he sees Trump’s announcement on Wednesday as more of an opening move than an endpoint for policy. One wild card is that the Federal Reserve could cut interest rates to support the economy. That’s what it had been doing late last year before pausing in 2025. Lower interest rates help by making it easier for U.S. companies and households to borrow and spend. Yields on Treasurys tumbled in part on rising expectations for coming cuts to rates, along with general fear about the health of the U.S. economy. The yield on the 10-year Treasury fell to 4.02% from 4.20% late Wednesday and from roughly 4.80% in January. That’s a huge move for the bond market.
By Najeh Bilal and Marwa Al-Bahrawi
Al-Seyassah/Arab Times Staff and Agencies
