The implications of the US election for businesses in the Middle East

This seismic event brings with it a wave of changes that could significantly impact businesses in the Middle East. We know that Trump tends to view foreign policy as transactional rather than with an overarching framework—and that makes operations much less predictable.

As this region also navigates a complex landscape characterised by economic and political volatility (as seen most vividly in Syria in recent days), shifting foreign policy and evolving environmental regulations, companies must adapt their strategies to thrive amid these changes.

Let’s delve into the multifaceted implications of the election results, highlighting both challenges and opportunities for businesses operating in the Middle East.

Economic landscape and trade dynamics

One of the most pressing concerns for Middle Eastern businesses is the potential for a more volatile trade environment. The new administration’s approach to international trade could lead to disruptions in supply chains, particularly as it seeks to renegotiate existing trade agreements and impose tariffs.

For companies in the region, careful financial planning and risk assessment will be crucial. Organisations must be prepared to navigate the increased costs associated with tariffs and potential delays in the movement of goods.

Moreover, the US Federal Reserve’s monetary policy will play a critical role in shaping the global economic landscape. While many expect interest rate cuts to combat persistent inflation, the reality is that these cuts may not come as swiftly as businesses hope, in part because many of the Trump campaign’s signature policy initiatives around tariffs, taxes and immigration may have inflationary implications.

If inflation remains a concern, the Fed’s ability to continue lowering interest rates could be hampered, leading to uncertainty in global markets. Middle Eastern businesses will need to closely monitor interest rates, as fluctuations could impact credit costs and investment strategies.

The energy sector: challenges and opportunities

The energy sector is a cornerstone of many Middle Eastern economies, and it is poised for significant shifts under the new administration. The focus on deregulation and increased domestic energy production in the US could lead to lower global energy prices.

This development presents challenges for oil-dependent economies in the region, which may see their revenues impacted by a decrease in prices. Countries such as Saudi Arabia, Iraq and the UAE, which rely heavily on oil exports, must brace for potential revenue shortfalls.

However, this shift also presents an opportunity for diversification and innovation within the energy sector. As global energy markets evolve, businesses in the Middle East can explore alternative energy sources and invest in renewable technologies. The push for sustainability and decarbonisation aligns with global trends, and companies that proactively adapt to these changes will be better positioned to thrive in a competitive market.

Geopolitical considerations and foreign policy

The geopolitical landscape in the Middle East remains fraught with uncertainty, and the new administration’s foreign policy approach could have far-reaching implications for regional stability. The transactional approach favoured by Trump could lead to shifts in alliances and partnerships, impacting businesses that rely on stable geopolitical relationships—or providing exciting new opportunities.

For instance, changes in the formal relationship between Israel and Saudi Arabia could alter the dynamics of trade and investment in the region. Companies must stay informed about these developments and be on the lookout for opportunities to adjust their strategies accordingly.

Additionally, the administration’s stance on issues such as Iran’s nuclear program and relations with Israel and Palestine will influence the overall security environment. Businesses operating in or with interests in conflict-prone areas may face increased risks, necessitating enhanced risk management practices and contingency planning.

Agility crucial for companies in the years to come

The implications of the recent US election for businesses in the Middle East are complex and layered. Therefore, companies must remain agile and responsive to the evolving landscape, leveraging opportunities for growth while mitigating potential risks.

By staying informed and adapting their strategies, businesses can navigate the challenges ahead and position themselves in 2025 and beyond for success in an increasingly complex global environment.