Dubai: While it is still too early to predict the impact of Trump’s steel and aluminium tariffs on Emirati companies, a number of experts predict that the firms are in a strong position to weather the storm.

Moreover, trade analysts predict that it may indeed be US-based companies that suffer the most from US President Donald Trump’s tariff on steel and aluminium imports in the end.

The UAE’s aluminium producers were, according to one expert, largely prepared for Trump’s decision to slap a 25 per cent duty on the import of the material. Simultaneously, Trump said on Thursday that he would apply a 10 per cent duty on aluminium imports to protect US producers.

“These companies were expecting tariffs of 8 per cent, that was already put in to their model,” said Saleem Khokar, head of fund management at National Bank of Abu Dhabi.

According to Khokar, local aluminium companies would be able to “cope with [the 10 per cent tariff] fairly well [because] the calibre of the product is such that it would be difficult to reproduce.”

He added that the UAE’s aluminium was of the highest grade.

Emirates Global Aluminium (EGA), one of the world’s largest producers of the metal, said in a statement to Gulf News that it was well prepared for any outcome.

“Alongside Asia, Europe and the UAE, the US is an important market for us,” the statement read.

“However, we do not wish to comment at this stage, beyond saying that we are well prepared for whatever market conditions may arise,” it added.

Media briefing

On Saturday evening, Emirates Steel declined to comment, saying that they would address the issue at a media briefing on Monday morning. Dubai-based Ducab, which recently inaugurated a new aluminium joint venture, did not respond to a request for comment.

Trump has said he believes the tariffs will protect American jobs, but many economists say the measures will simply displace jobs, driving prices up for users of aluminium and steel.

“It will end up costing more jobs than it creates,” Khokar said.

Industries such as automobile manufacturing and packaging would suffer due to higher prices, he added, with the tariffs likely to destroy more jobs than the curbs on imports would generate.

A day later, facing calls for retaliatory measures from the EU, Trump tweeted that “trade wars are good, and easy to win.”

Khokar questioned the long-term impact of a potential trade war, saying: “What will the retaliation be, and by how much will it escalate?”

Elsewhere in the Gulf, a senior source at one of Saudi Arabia’s main steel factories shrugged off concerns over the tariffs, saying that Trump’s decision was “not expected to have a negative impact on Saudi Arabia’s exports to the US.”

The Saudi executive said that the countries most affected by the decision would be those with surplus iron and steel production, such as the People’s Republic of China, India, and South Korea, who used to export much of their surplus to the US.

Asking not to be named because they were not authorised to speak publicly about the situation, the source added that as a result of the decision, however, Saudi Arabia had recently begun to take note of the risks of dumping and the need to combat the practice to protect the country’s industry.

Job losses

Experts point to a time in the last two decades when a US tried, and ultimately failed, to introduce steel tariffs.

President George W. Bush imposed tariffs on imports of certain steel products in 2002. The tariffs only lasted for 21 months.

Gary Hufbauer, a trade expert at the Peterson Institute for International Economics who opposed the tariffs, estimated in 2003 that a maximum of 43,000 jobs had been lost in steel-consuming industries as a result of the duties.

The economist told Gulf News that history shows that trade protection is both costly and ineffective.

“High tariffs translate into higher prices both for consumers and companies that rely on affordable, high quality inputs,” Hufbauer said.

Protectionism disproportionately hurts poorer households, he added, who spend a greater share of income on traded goods.

“High tariffs also risk provoking tit-for-tat retaliation in the foreign market, which can seriously hurt domestic firms and workers,” he said.