The Impact of the New U.S. Tariffs under “America First” on Middle East & North Africa Economies: An In-Depth Analytical Study with a Focus on Jordan, Egypt, and Lebanon

October 9, 2025 4 min read

Member Zakaria Al-Ashybat – Finance & Investment Committee, Third Cohort
Article Title: The Impact of the New U.S. Tariffs under “America First” on Middle East & North Africa Economies: An In-Depth Analytical Study with a Focus on Jordan, Egypt, and Lebanon

Introduction: The “America First” Philosophy and Tariffs as a Protection Tool
With the U.S. administration’s adoption of the “America First” slogan, new tariffs have been imposed on many imported products to reduce the trade deficit, bolster domestic industry, and create jobs. These protectionist policies do not only affect the U.S. market; their repercussions extend to developing and emerging economies—especially those commercially and financially tied to the U.S. dollar—including the countries of the Middle East and North Africa.

I. General Effects of U.S. Tariffs on the MENA Region

  1. Spillovers to External Debt Servicing Costs
    U.S. tariffs can slow global trade and strengthen the U.S. dollar as capital seeks safe-haven assets in the United States. This raises the cost of servicing dollar-denominated external debt for developing countries, including many in MENA that rely heavily on external borrowing to finance budget deficits and infrastructure projects.
    Related economic concept: As the dollar appreciates, the cost of borrowing and debt service rises for countries indebted in dollars, translating into higher sovereign yields and borrowing costs. This policy mix has stoked market concern, prompting investors to hedge and move toward safe havens.
  2. Widening Trade Deficits
    Tariffs reduce developing countries’ ability to export to the U.S. market, squeezing their export revenues and deepening trade deficits. A stronger dollar also raises the local-currency cost of imports—so-called imported inflation—further pressuring trade balances and increasing reliance on external financing.

II. Country Details: Egypt and Lebanon

1) Egypt

  • External debt: Approximately USD 152.9 billion at end-Q1 2024, according to the Central Bank of Egypt.
  • Investment flows: Trade tensions and higher tariffs tend to diminish the appeal of emerging markets for foreign investors seeking stable returns, redirecting capital back to the U.S. This implies potential declines in FDI into Egypt, particularly in non-oil sectors.

2) Lebanon

  • External debt: Exceeds USD 40.4 billion (2023), amid a severe financial crisis and limited, opaque data.
  • Foreign-currency inflows: Lebanon relies heavily on remittances. Any global slowdown linked to U.S. protectionism may weigh on these flows and reduce FX reserves.

III. Jordan: A Closer Look at the Effects of U.S. Tariffs

1) Macro Indicators

  • Debt: Around USD 42.5 billion in 2024.
  • Foreign reserves: About USD 21 billion by end-2024.
  • Exchange rate: The Jordanian dinar is pegged to the U.S. dollar (1 USD ≈ 0.71 JOD), which transmits dollar strength directly into the economy.

2) Transmission Channels to Jordan’s Economy

  • Higher import costs: Jordan imports most key inputs and essentials in dollars. A stronger dollar lifts import costs, fueling imported inflation and pushing up domestic prices.
  • Trade balance pressures: The trade deficit surpassed USD 9.6 billion in 2024. With constrained export capacity and costlier imports, the deficit may widen further, pressuring the balance of payments and foreign reserves.
  • Debt-service burden: With the dinar pegged to the dollar, higher U.S. rates compel Jordan to raise local rates to defend the peg, lifting domestic borrowing costs and the public debt service burden (both domestic and external). Although the Federal Reserve kept rates on hold in March 2025 while signaling possible increases later in the year, monetary conditions remain in a state of watchfulness.
  • Exchange-rate considerations: Despite the peg, prolonged pressure on reserves amid weaker FDI and remittances could test the central bank’s capacity to maintain the peg over the medium term. That said, the Central Bank of Jordan continues to pursue a coherent monetary policy consistent with its strategic objectives, supporting the stability and purchasing power of the dinar in the face of external shocks.
  • Social impact: Rising prices alongside stagnant wages and higher living costs can erode purchasing power, increase poverty and unemployment, and threaten social and economic stability.

Conclusion & Policy Implications

In light of the new U.S. tariffs under the “America First” framework, developing economies in MENA—especially Jordan, Egypt, and Lebanon—face mounting challenges: higher external-debt costs, pressure on the balance of payments, and weaker FDI inflows. Combined with a stronger dollar and tighter global trade, these dynamics create direct and indirect strains on financial and monetary stability, risking larger fiscal and trade deficits and feeding imported inflation—echoing dynamics seen during the 1971 dollar regime shift under President Richard Nixon, which effectively “exported inflation” worldwide.

Addressing these headwinds requires flexible, proactive economic policies, including diversifying funding sources, boosting domestic production to reduce import dependence, and supporting non-traditional export sectors. It also underscores the importance of regional and international cooperation to reframe a fairer, more stable trade and financial architecture—one that protects the interests of developing countries and reduces their vulnerability to swings in the global economy and the policy choices of major powers.

Zakaria Adel Al-Ashybat
Finance & Investment Committee – Third Cohort