President Trump’s tariff announcements on Wednesday evening mean that much of the Middle East and North Africa is subject to a 10% tariff, although Jordan is more vulnerable given its greater dependence on US demand the fact that it was hit with a higher 20% tariff. The downside risks to global oil demand, reflected in a sharp drop in oil prices today, may worry oil producers in the Gulf as they embark on raising oil output. Saudi Arabia in particular will be watchful of balance of payments pressures after the current account flipped into deficit in 2024, and we expect the shortfall to widen this year. The dollar peg is not under threat, but this reinforces the need for tighter fiscal policy.
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