The jitters that hit global markets following Trump’s sweeping tariffs on US imports were felt in Egypt as soon as the Eid break ended. The Egyptian Stock exchange saw heavy sellouts on Sunday, though it gained some of the lost ground during the week. Gold prices continued the upward trend that began in January and the value of the pound fell against the dollar, trading for around LE51.4 on Monday compared to LE50.5 a week earlier.
It’s the contagion effect, explained financial expert Khaled Hamza. The value of the pound fell as foreign investors in Egyptian treasury bills and bonds liquidated their investments and requested the transfer of sale proceeds abroad to escape to safe havens, he explained. When there is uncertainty, stock market and portfolio investors prefer to exit and watch how things will develop before deciding their next move.
The decline in the exchange rate of the pound could also be a proactive step by the Central Bank to limit the exit of hot money by forcing losses on those who exit, he added, noting that the decline in the value of the pound is an incentive for investors who have not entered the market to benefit from the depreciating currency. The pound fell despite the decline in the global exchange rate of the dollar against other currencies, noted Hamza.
What is significant, he added, is that the depreciation showed the exchange rate is flexible, allowing it to absorb shocks without depleting reserves.
On 2 April, US President Donald Trump announced tariffs ranging from 10 to 50 per cent on US imports from around the globe. Certain categories of goods, such as energy products, various minerals, chemicals used in energy and manufacturing, vaccines and some metals, will be exempt from the tariffs. Sixty countries, including China, Vietnam, Thailand, Taiwan, and Indonesia will be subject to a higher range of tariffs due to their larger trade deficits with the US. Meanwhile, a 25 tariff on foreign-made automobiles and their parts, as well as on steel imports, is already in effect.
Egypt is among the group of countries subject to the lowest 10 per cent tariff, unless goods are exempted or classified under one of the categories subject to higher tariffs, explained Mohamed Badreldin, vice president of public policy at N Gage Consulting. He explained that in situations in which both Egypt and China export similar products, such as ready-made garments, Egyptian products will be subject to a 10 per cent tariff, whereas Chinese exports will face a 54 per cent tariff. However, exports of energy products, such as oil from Egypt, will be exempt.
US trade with Egypt with was estimated at $8.6 billion in 2024 according to the office of the US Trade Representative (USTR), with US exports to Egypt registering $6.1 billion in 2024, and imports from Egypt totaling $2.5 billion. According to the Observatory of Economic Complexity (OEC) website, in January 2025, the top US exports to Egypt were petroleum gas, soybeans, and acyclic hydrocarbons. Top US imports from Egypt included non-knit men’s suits, mixed mineral and chemical fertilisers, and knit sweaters.
Prior to the new tariffs, Egypt enjoyed preferential entry to the US market under certain conditions. It could export some products duty-free to the US within the framework of the Generalized System of Preferences (GSP) and, under the Qualifying Industrial Zones (QIZs) framework, goods that combine Egyptian and Israeli components manufactured in designated industrial zones.
Badreldin believes GSP exceptions will end, while the future of QIZ exports remains unclear. He expects they might also fall under the 10 per cent tariff rate because countries like Jordan and Oman, which have free trade agreements with the US were subjected to reciprocal tariffs — 20 per cent for Jordan and 10 per cent for Oman. Moreover, Trump announced the imposition of a 17 per cent tariff on imports from Israel.
Yahya Elwathik Bellah, head of the Egyptian Commercial Service said QIZ exports will be subject to the new 10 per cent tariff. Addressing a seminar organised by the Egyptian Centre for Economic Studies (ECES) Elwathik Bellah said negotiations are underway with the US side to rescind the new tariffs provided Egypt remove some non-trade barriers.
Badreldin said that, in theory, Egyptian exports should not be affected by the added tariffs given that other countries will face the same or even higher tariff rate. “If you compare the 10 per cent tariff on Egyptian exports to the 54 per cent tariff rate on Chinese products this means a huge competitive advantage for Egyptian exports,” he pointed out.
According to data by the American Chamber of Commerce in Egypt in 2023, textiles and apparel represented around 50 per cent of Egypt’s exports to the US, followed by iron and steel and agriculture. In the case of iron and steel, exports from all countries will face a 25 per cent tariff. What worries Badreldin is the expected spike in US inflation as a result of the higher tariffs which will affect US citizens’ purchasing power.
Badreldin does not expect Egypt to impose reciprocal tariffs on US exports as they are mostly inputs and raw materials for manufacturing.
It is not yet clear if other countries will change their tariffs on Egyptian exports, says Badreldin. Egypt has a network of free trade agreements and as long as their terms are respected there should be no problems. He called on the relevant Egyptian authorities to review any non-tariff barriers which may trigger equal treatment.
“If countries start to follow the equal treatment approach this will cause a lot of problems because what really hinders the flow of exports are non-tariff barriers,” Badreldin stressed.
Aside from direct trade relations, should the US continue with its decision to impose tariffs, the global movements of goods will slow down which could affect the number of ships using the Suez Canal.
According to Hamza, no one has a clear idea about what exactly will happen. The situation, he says, is similar to that prevailing between the two world wars, when protectionism was on the rise. What is happening is a questioning of the trade architecture the developed world has propagated for over 75 years. Hamza expects US citizens to resist Trump’s policies, especially since it means more expensive goods for them, and Trump’s dream of manufacturers relocating to the US is unrealistic because of the difference in the cost of production. The hourly rate for an employee at a fast-food store in the US is $13 compared to $100 per month for an engineer in a developing country, he points out. And even should industries consider relocating, it will not happen overnight.
Despite the gloom, there are opportunities, says Badreldin. Egypt could capitalise on the fact that US importers will look for new countries from which to import relatively cheap products. And it could work to attract new investments looking to relocate to benefit from the lower baseline tariff imposed on Egypt and benefit from the multiple free trade agreements Egypt is party to, which will give access to other markets beside the US.
He recommends acting fast, especially for the apparel and textiles, food and white goods sectors. “Egypt has a good reputation in these industries and can easily attract companies to relocate here,” he said, stressing that the government should introduce a programme or set of incentives to allow factories to be set up quickly.
Ahmed Al-Gabbas, deputy chairman of the Leather Export Council of Egypt, said that given the higher customs duties imposed on other countries, Egypt has a significant opportunity to turn the global shift into a major boost for Egyptian exports to the American market, either through the QIZ agreement or outside of it. He too believes this could encourage investment in Egypt as a base for exporting to the US. He mentioned that about 100 factories in Robiki Leather City are ready to produce leather products and can immediately receive production lines and begin manufacturing. Al-Gabbas also said non-Chinese investors who have operations in China may look for new destinations to maintain export flows to the US market.
The same applies to the garments sector. Mohamed Al-Sayyad, a board member of the Ready-Made Garments Export Council, said there is a great opportunity to increase garment exports to the US market due to the customs duty differences between Egypt and other major exporters. He is hopeful that Egypt’s QIZ exports will not be affected by the new tariffs, thus giving Egyptian garment exports a competitive edge. Garment exports through the QIZ agreement reached about $1.2 billion in 2024, according to Al-Sayyad.
Even a 10 per cent tariff on Egyptian exports outside the QIZ agreement is favourable, he said, compared to other countries that face much higher tariffs.
He called on the government to provide industrial financing with interest rates not exceeding 15 per cent to help factories purchase raw materials and increase production capacity for export, and urged faster disbursement of export support dues.
* A version of this article appears in print in the 10 April, 2025 edition of Al-Ahram Weekly
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