Nearly seven years ago, I wrote a column for this newspaper in which I described a growing anxiety about the potential for an all-out global trade war.
In July 2018, there had already been an exchange of protectionist shots between the US and its economic rivals China and the EU. However, I tried to answer the following question: are tariffs pointless these days, given the realities of the global manufacturing supply chain?
This was before the Covid-19 pandemic, the war in Ukraine, the expanding impact of extreme weather, and the emergence of generative AI tools such as ChatGPT and DeepSeek. “We can pretend all we like that our borders protect us or insulate us from [external] forces, but they don’t. The idea of creating any kind of impenetrable wall – financial, physical or virtual – is obsolete,” I wrote at the time.
Back then, I believed that the approach the UAE was choosing – including its openness to attracting talent from around the world and harnessing the latest innovations, as well as prioritising international collaboration and partnerships – would put it in a strong position to benefit from a rapidly changing world. I still believe this to be true.
Since 2021, the country has been able to strengthen bilateral trade relationships even as the global scene has fractured and bodies such as the World Trade Organisation struggle to revamp globalisation. The UAE has signed Comprehensive Economic Partnership Agreements – or Cepas – with other countries that provide greater market access, lower tariffs and simplify doing business. The countries included India, Colombia, Australia, Israel and Indonesia. More deals are under discussion.
The Cepa deals have contributed Dh135 billion ($37 billion) to its non-oil trade with partner nations – a 42 per cent increase compared to the previous year, Sheikh Mohammed bin Rashid, Vice President and Ruler of Dubai, said on Wednesday on X. “While global trade grew by just 2 per cent in 2024, the UAE’s foreign trade expanded at seven times that rate, achieving an impressive 14.6 per cent growth,” he said. “In 2021, we set a goal of reaching Dh4 trillion in annual foreign trade by 2031. By the end of 2024, we have already achieved 75 per cent of that target. At this pace, we will reach it years ahead of schedule.”
The International Monetary Fund has projected a 5.1 per cent growth in the UAE’s real gross domestic product this year. The investment banking company UBS says this expansion is supported by reforms and tourism, property, increased government capital spending and robust foreign direct investment. In an age of AI, both the public and private sectors are collaborating with international partners to ensure that the Emirates is not left behind.
Further, at Cop28, hosted by the UAE, the first ever “trade day” was launched, making it clear how important it is to factor in climate when setting trade policies. “Climate and trade policies need to work together,” UN Trade and Development Secretary General Rebeca Grynspan said in December 2023. “As the world is coping with the devastating effects of global warming, it’s time for trade to play its role in shaping climate action that fosters inclusive and sustainable development.”
That move represented a new kind of collaborative leadership.
Under Donald Trump’s presidency, America – the world’s largest economy – is effectively saying that it is stepping back from any kind of guiding role on the journey towards a more prosperous future for all. It is a unilateral policy at a time when, as highlighted above, we are beset by the same challenges wherever we are and seek a collaborative solution.
Mr Trump’s announcement of tariffs on Chinese goods has served to push further away any chance of such a solution, with China filing a complaint with the WTO and levying its own tariffs. American tariffs on its major trading partners Mexico and Canada have been paused for now, but they could materialise within weeks, until then hanging around like a warmth-sapping cloud in the sky. The EU, meanwhile, is expecting to be targeted as well, and it is making plans for how it might reply.
Unsurprisingly, all of this has caused uncertainty and affected the prices of commodities including oil, roiling stock markets and making it less likely that interest rates will fall as quickly as expected. There are growing concerns that these actions will cause inflation. Yet there is hope that it is not inevitable that every other nation should be dragged into what threatens to become a trade war. The example of the UAE should make that plain.
All countries can chart their own course within the chaos and find willing partners if they remain open and clear-sighted. It is comforting that trade, historically at least, only grows – even if it can be an uneven and non-linear expansion. Not just in goods but in particular services, people and companies will always want more of what they need. It is evident how resilient that has been and how supply chains can evolve and be reworked, no matter how choppy the waters might become.
