The trend of globalisation will continue, despite the election of Donald Trump as the next US president, while trade will also keep growing with the Gulf region set to benefit from its safe haven status, according to analysts.
Mr Trump has vowed to impose US tariffs of between 10 per cent to 20 per cent on all imported goods – which has raised fears of a global trade war and supply chain disruptions. There are concerns that it will reignite inflation and lead to stagnant growth.
“US presidents come and go, so I wouldn't see that the whole world is changing. Globalisation is here to stay,” said Dr Frank Jurgen Richter, chairman of think tank Horasis.
“The whole order based on trade, on intellectual property exchange, manufacturing in one place, services on the other side, I don't really think that the tariffs [that Mr Trump plans to impose] will change a lot of things,” he told The National on the sidelines of the Horasis event in Dubai on Tuesday.
chairman of think tank Horasis
There is a lot of uncertainty in places like Europe, with manufacturers fearing that tariffs might suddenly go up for them, he said. However, in the long run, they will have to revise their strategies and “find solutions that can overcome the situation”, maybe moving some of the manufacturing to the US, or discovering new places for trade, like in Asia or Africa.
“I wouldn't underestimate the capacity of mankind to find solutions, even with President Trump in power.”
The US president-elect has also pledged to impose tariffs of between 60 per cent to 100 per cent on Chinese imports as part of its "America First" trade measures.
But, all of this is “political puffery”, said Mishal Kanoo, chairman of the Kanoo Group, with the impact likely to be felt by American consumers rather than by China.
“I've never seen sanctions benefit or harm one country over the other, but I have seen them harm or benefit societies or populations,” he told reporters on the sidelines of the event.
While China has not recovered back to the double-digit growth rates post Covid, mainly due to domestic challenges such as its real estate sector crash, the country will find alternative markets to deal with the tariffs, said Mr Richter.
“China is also re-adapting its economic policies. In the past, it was just enough to put money into infrastructure. I think this time is over, and also the era of cheap manufacturing. Now, this cheap manufacturing is moving to places like Vietnam, Indonesia and Thailand, and they [China] only keep high value-added services in telecom, in electric cars, in AI – actually China is like a main leader and challenging the US. So, competition is good. It can't be that just one country is leading.”
Supply chains and trade have been heavily disrupted since last year due to geopolitical tensions such as the Red Sea crisis. Yemen's Iran-backed Houthi rebels have been attacking shipping vessels in the Red Sea, a critical conduit for 30 per cent of the world's container traffic, in a show of solidarity with Hamas in Gaza, forcing mariners to take long-haul alternative routes.
“Sometimes the [trade] cycle is going to be positive, [sometimes] it is going to be negative,” Mr Kanoo said.
“The overall picture is, is trade happening globally? The answer is yes. Is it continuing to grow? The answer is yes. Is it costing more? Perhaps, depending on where you are, it costs more. Is it stopping business? No. As more and more people demand more and more, there'll be more demand for growth in freight and global shipping.”
Meanwhile, the Gulf region continues to maintain its safe-haven appeal and is “going to continue to grow as far as the economy is concerned, on the backs of both India and China, because of the demand for energy … [it] should be very good for us”, the Emirati businessman said.
Mr Richter agreed that amid all the uncertainty, “one winner is the Gulf region”, which is attractive for India, China and Russia, among others. “It's like the modern trading place, where everybody is welcome to join hands and to work together,” he said.
