What does Trump 2.0 mean for UAE?

As soon as Donald Trump won the U.S. presidential election on November 5, the UAE President, Sheikh Mohamed bin Zayed Al Nahyan, congratulated him on becoming the 47th President of the United States, marking his second victory after the 2016 election.

In fact, previously on September 26, during the UAE's official visit to the U.S., Sheikh Mohamed bin Zayed also met with Trump to commend his efforts in strengthening the partnership between the two countries, given that the bilateral trade between the US and the UAE amounted to $31.4 billion in 2023. 

Consequently, this resulted in an $18.3 billion trade surplus for the US becoming America’s 4th largest trade surplus. Since 2022, the trade between the two countries has increased by 19%. American firms continue to invest and expand in UAE’s energy, aerospace, technology, and financial markets, with Trump’s foreign policies with the country based on transactionalism which focuses on mutual monetary gains.

Besides, the UAE has investments amounting to $1 trillion in the US, ranging from real estate to renewable energy. Notably, a key collaboration in the technology sector is between the Emirati G42 and American Microsoft Azure. 

Hence, Trump’s reelection means all good things for the UAE with even greater trade opportunities. As of 2023, the non-oil trade between the two reached $31.4 billion. The president of the US-UAE Business Council highlighted that US exports to the UAE provide 125,000 jobs in the UAE. 

Although the US, under Trump’s administration has positive connotations for the UAE, the outlook for other countries is grim with tariffs being anticipated for China accounting for the previous term trade war initiated by Trump. 

However, it is vital to understand that the UAE may be put in a situation where it must pick sides, not just between China and the US. The US has had rough relations with many other countries including Iran and Russia, both of whom share cordial relations with the UAE. Further, there are other regional players that the UAE will be forced to side with.

Such is the case of the Palestinian conflict, Trump being heavily aligned with Israel may push UAE to deepen their ties with Israel according to the Abraham Accords established in 2020. This is unlikely to solve the issue of the conflict but it may provide business opportunities for Israel and the UAE. In 2023 alone, trade between Israel and the UAE reached $2.9 billion, encompassing goods such as diamonds, hot-rolled iron bars, and wheat.

Moreover, the two countries have a Comprehensive Economic Partnership Agreement (CEPA) which lowers tariffs on 96% of the traded goods easing doing business between the countries. Additionally, the UAE is the 16th largest trading partner of Israel whereas Israel is yet to rank among UAE’s top 20 trading partners. Perhaps Trump's being elected will change that and create a greater inflow of Israeli businesses into the country.

Indeed, Trump is also known for his pro stance on fossil fuel usage coupled with his skepticism of climate change is bound to boost the oil and gas exports between the countries. To the extent that the global oil market is likely to be heavily impacted by it, in his previous term Trump was able to stabilize the market during uncertainties in cooperation with OPEC. 

Subsequently, he managed to create a tightly competitive oil market which is likely to benefit the oil industries of the US and the UAE.