New US tariffs will create a significant negative economic shock to economies across the Middle East and North Africa (MENA), according to BMI, a FitchSolutions company.

Jordan is the economy most reliant on exports to the US in the MENA, followed by Libya, Iraq, Bahrain and Tunisia.

However, BMI stated it will not revise its key economic forecasts until the situation becomes clearer.

However, the US has exempted oil imports from tariffs, resulting in a lower effective rate than the headline rate for MENA oil exporters. 

Nearly all of Libya, Iraq and Kuwait’s exports will be exempted from the tariffs, as will about 80% of Saudi Arabia and Algeria’s exports to the US. 

This will significantly reduce their effective rates, BMI said.

Qatar, the UAE, Bahrain and Oman will face the highest effective rates among oil exporters, given the small share of oil in their exports to the US and the diversified nature of their US exports. Moreover, the direct impact will be limited for most of these economies because they are not highly dependent on exports to the US. 

The impact will be manageable in Bahrain, BMI said. 

However, Bahrain and the UAE have been affected by the special tariffs (25%) on aluminium, the report added.

(Editing by Seban Scaria seban.scaria@lseg.com )