Trump’s economic calculations loom over North Africa

Trump sees the accords as a means to reset geopolitics in the Middle East and North Africa (MENA) region, where Israel could integrate into a region historically hostile to its presence, given its treatment of Palestinians. These accords pave the way for a peace based on economic partnerships and mutual interests.

And while Trump may not be familiar with the nitty-gritty regional dynamics of North Africa, he will certainly be able to distinguish countries that could be long-term genuine partners from those with more short-term interests.

He will also understand that some countries may not even be inclined to engage with Washington, such as Algeria, which looks more amenable to allying with Iran. While the US could work with Algeria on some security-related tactical matters, it has little else on which to cooperate.

China concerns

And while Trump looks to favour Morocco over Algeria, he doesn't want it to become an industrial platform that could thwart planned US economic sanctions on China. Morocco has become a strategic destination for Chinese EV (electric vehicle) firms, and there are concerns that Beijing could use its free trade agreement to get (EVs) assembled in Morocco into the American market. Trump will not like that.

China has invested around $10bn in Morocco's EV and battery industry to export to the European Union and the Americas, taking advantage of trade agreements between Rabat and these markets. Chinese companies have begun building factories on the Mediterranean coast in what is now known as Tangier Tech City, which will be one of the largest in the Mediterranean, along with similar projects in Turkey.

The Gotion High-Tech battery group also announced the construction of an industrial platform in Kenitra, north of Rabat, on the Atlantic Ocean, at a cost of $6.5bn, of which $1.6bn will be invested in 2025. This platform will produce batteries for Chinese EVs and will benefit from investment incentives from the Moroccan government.

Near-equal split

The total bilateral trade between Rabat and both Beijing and Washington combined is estimated at around $14bn, split evenly between the two, making Morocco equally dependent on both economic powers.

Trade with China exceeded $7bn last year, while trade with the US amounted to $6.8bn, of which $4.5bn were US exports to Morocco, which, in turn, exported goods worth $2.3bn. In 2022, Washington achieved a trade surplus of $2.1bn with Morocco, and in 2023, commodity trade between the two countries was estimated at $5.5bn. This is a giant leap compared to 2006, when bilateral trade stood at $1.3bn. However, things began picking up after the Morocco-America Free Trade Agreement (MAFTA) was clinched.

Moroccan exports to the US include phosphate fertilisers, semiconductor chips, mechanical equipment, automobiles, aircraft parts, agricultural products, and clothing. Imports from the US include energy materials, gas turbines, civil and military aircraft, digital technology, and agricultural and medical supplies. US investment in Morocco amounted to $379mn in 2022, whereas US investment in Algeria—specifically in its fossil fuel sector—is threefold higher.

Interestingly, US-Morocco trade has typically seen bumps under Republican administrations. Trump's recognition of Moroccan sovereignty over Western Sahara in 2020 has earned him much favour with its government. The president-elect also promised to open an economic consulate in the southern city of Dakhla during his first term.

Dwindling trade

For its part, Algeria is wary of any additional steps Trump might take in favour of its rival to the West—particularly over investment promises in Western Sahara where Spain, France, Germany, the United Kingdom, and some Gulf states have already started to initiate investments.

Generally speaking, Washington doesn't like Algeria's military cooperation with Iran in the North African region. It is also wary that Algiers could try to thwart attempts to normalise relations between Israel and other countries in the region. Neither is the US a fan of Algeria's decades-long socialist policies. In 2023, US exports to Algeria amounted to $1.2bn—just a quarter of the amount it exported to Morocco.

As for oil, the US has traditionally been a key importer of Algerian petroleum, with over $1bn invested by American companies, including Chevron and ExxonMobil. But when the US began expanding its domestic oil and gas exploration and production in 2013, it brought down its foreign reliance on oil and gas. In 2023, Algeria exported $3bn worth of oil to the US, a 37% decrease from a decade ago.

According to a World Bank report put out in October, "Global commodity prices could fall to their lowest level in five years by 2025 due to an unprecedented oil supply surplus, estimated at 1.2 million barrels per day." This is bad news for Algeria, which needs oil prices above $120 per barrel to cover its budget deficit, which is expected to exceed $60bn by 2025.

Read more: Algeria's 'optimistic' budget is the largest since independence

And Trump could abandon several energy supply markets to boost US energy exports by encouraging shale oil production to reduce trade deficits. The US trade surplus with Morocco increased by 33% between 2022 and 2023, exceeding $2bn. This figure will likely double in the coming years as Rabat is expected to buy more American commercial and military aircraft and industrial and defence equipment. As for Algeria, the US continues to record a trade deficit of $1.8bn as it prefers to buy Chinese and Turkish goods.