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The US-China trade war is now an open secret. In 2018 both the countries started imposing tariffs on other’s goods and services. In the recent past, the USA also placed a ban on China’s technology giant Huawei. This article will cover the impacts of the US-China trade war on other countries in general and Gulf countries in particular. Currently, Gulf countries like the UAE and Bahrain export their metals to USA and USA also export its weapons to these countries. However, the new tariffs will force the Gulf states to find a new trade partner like China and Russia.

US president Donald Trump has prepared for a trade war with China. The tariffs on Chinese goods has been increased to 25 percent. Formally it was 10 percent. In 2018 both the countries increased tariffs on other’s supplies. Dialogues are also under process to achieve a negotiated settlement. This article covers how this trade war affects other countries.

Gulf Map – Photo via wikimedia.org

This trade war will obviously affect other countries. The several Gulf States including Saudi Arabia, Bahrain, and UAE supply their metals to the USA. And the increased tariffs will create obstacles for these countries. Now the UAE and Bahrain requested the USA to review the decision of increased tariffs. The tariffs placed direct impact on Gulf exports to the USA.

Here the question arises why the USA is not imposing bilateral tariffs instead of Global tariffs. The answer is very simple. US economic experts claim that China’s goods cannot be checked and verified easily. The direct bilateral tariffs will force China to export its product to a tariff exempted country. And that tariff exempted country will secretly export those Chinese products to the USA. Therefore, the only solution lies in a global tariff which will also affect Gulf countries.

Currently, the USA is trying to increase metal production to lower its dependence on other countries. This is the reason why the UAE and Bahrain are facing increased tariff phenomenon. Many experts claim that current tariff policies of the USA are against the World Trade Organization (WTO). Experts believe that the US’s decision to impose tariffs and ignoring WTO will weaken the organization. As it will prompt other economic giants like China and India to bypass WTO.

http://www.wto.org/english/forums_e/public_forum10_e/public_forum10_e.htm

The global tariffs are of great importance for Gulf countries. Because the Gulf states export their oil and Gas to other countries and import food and military hardware from other countries. The US tariff policies will definitely prompt UAE, Bahrain and Saudi Arabia to look towards China and Russia for a beneficial trade.

The US economic experts claim that WTO is being exploited by China and unilateral tariff policy will force WTO to reform its mechanism. This may be true to some extent but the Gulf states will have to improve their trade structure to avoid complete dependence on a single country. They should concentrate on increasing productivity. The increased production allows manufacturers to manipulate the prices at global as well as local levels.

Photo credit: US Energy Information Administration at flickr.com

Most importantly the free and perfect trade depends upon peace. The deteriorating situation of the middle east after 2010 is also a result of the global recession of 2008. The Gulf countries should seriously address the issues associated with the US-China trade war. The US-China trade war will Gulf states to formulate a new trade strategy. On the other hand by this tariff policy, the USA may lose its key allies in the Gulf.