Arab markets rebound after Trump tariff pause

The move has eased fears of a global recession, but an escalating tariff war on 'just China' means that we are not yet out of the woods

GIUSEPPE CACACE / AFP

A trader walks by beneath a stock display board at the Dubai Stock Exchange in the United Arab Emirates.

Arab markets rebound after Trump tariff pause

Maher Chmaytelli

last update on 11 Apr 2025

Arab stock markets rebounded as US President Donald Trump paused tariff hikes on all major trading partners, except China, easing fears of a trade war damaging global energy consumption.

Gulf markets are particularly sensitive to oil prices as they largely underpin government spending that benefits companies. The Saudi market Tadawul—the largest in the region—ended Thursday up 3.7%, paring weekly losses due to the crisis to 3.2%. All major Arab markets were also up on Thursday, including Abu Dhabi, Dubai, Cairo, Doha, Muscat, Casablanca, and Amman.

“We are not out of the woods yet,’’ cautioned Wael Mahdi the CEO of Saudi advisory firm Elevare 360, and author of the book “OPEC in a Shale World,” pointing out that the trade war between the US and China is not resolved and that Trump’s decision is just a reprieve that could be walked back.

Trump excluded China from a pause on the implementation of tariff hikes for 90 days. He increased tariffs on Chinese imports to a record 145%, while Beijing retaliated by raising levies on US imports to 84%.

Goldman Sachs revised the probability of a US recession to 45% after Trump’s announcement, just hours after raising it to 65%, amid the global market selloff.

The Saudi market Tadawul—the largest in the region—ended Thursday up 3.7%, paring weekly losses due to the crisis to 3.2%

"A trade war between the world's two largest economies can still lead to a recession,'' said Mahdi. "A recession would curtail energy consumption and cause a sharp drop in oil prices that would adversely affect petroleum-exporting countries."

Brent crude, the global benchmark, rose as high as $65 a barrel on Thursday after sinking below $60 per barrel on Wednesday for the first time since 2021.

'Just China'

"It has become clear now that Trump's target is just China," said Nicolas Photiades, director of Orion Financial Solutions financial advisory firm in Beirut.

"He does not want a recession that would hurt the American economy or allies like Saudi Arabia and the United Arab Emirates that have committed to invest massively in the US economy," he added, mentioning the US President plan to visit Riyadh and possibly other countries of the region, on the first foreign trip of his second mandate.

Saudi Crown Prince Mohammed Bin Salman told Trump in January that the kingdom would invest $600bn in the United States over the next four years. The US president later said he would try to get the proposed investment to $1tn.

For its part, the United Arab Emirates unveiled a 10-year, $1.4tn investment framework in the United States following a meeting in March between Trump and Sheikh Tahnoon Bin Zayed Al Nahyan, the UAE's national security adviser, according to the White House.

All major Arab markets were up on Thursday, including Riyadh, Abu Dhabi, Dubai, Cairo, Doha, Muscat, Casablanca, and Amman

Oil prices in check

And in a decision that aligns with Trump's goal of keeping oil prices in check to tame inflation, the OPEC Plus group of oil-exporting countries, led by Saudi Arabia and Russia, announced on 3 April that it will increase supply in May by 411,000 barrels a day.

"It was a careful move: by putting more oil on the market, OPEC Plus cannot be blamed of fueling inflation or contributing to recession," Mahdi said, pointing out that China is the world's largest oil importer.

Even before Trump's return to the White House, gasoline and diesel consumption was falling in China because of a real estate crisis and because of the increased spread of electric vehicles and renewables.

Monia Malik, chief economist at the Abu Dhabi Commercial Bank, cautioned against oversupply by oil exporters beyond the agreed level, as it would weigh on prices and indirectly on the Gulf countries' economic performance.

"Adherence to OPEC+ compensation cuts will be critical for limiting the actual increase in supply,'' she said. "It's still too early to breathe."

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