Trump’s tariffs: Challenge or opportunity for Jordan in global trade arena

US President Donald Trump’s decision to impose new tariffs on a range of countries triggered significant debate in global economic and trade circles. US public opinion polls showed that 61 per cent of Americans believed the tariffs would negatively impact consumers, compared to only 14 per cent who expected a positive outcome. The decision included a general 10 per cent tariff on all imports, with a specific 20 per cent tariff imposed on products from Jordan. This was justified by claims that Jordan imposes a 40 per cent tariff on American goods, but closer analysis suggests the true goal was to address the US trade deficit, not to match existing foreign tariffs.

For example, the US imports substantially more from China than it exports to it, creating a trade deficit of $295 billion out of a total import value of $440 billion. This imbalance represents a 67 per cent gap, roughly double the 34 per cent tariff the US later imposed on Chinese goods. These tariffs are part of a broader US policy aimed at protecting domestic industries and correcting its trade imbalance. However, they have major implications for global trade, presenting challenges for many countries, including Jordan.

The United States is one of Jordan’s most important export markets. In 2024, Jordan exported around $3.11 billion worth of goods to the US, accounting for approximately 25.7 per cent of its total exports. In return, Jordan imported $1.88 billion in US goods, resulting in a trade surplus of $1.23 billion. Jordan’s major exports to the US include garments, jewelry, fertilizers, chemical products, and pharmaceuticals. These exports have long benefited from a free trade agreement between the two countries, which exempted many goods from US tariffs.

The new tariffs reflect a clear hierarchy in US trade priorities. Some countries faced significantly higher rates—Syria (41 per cent) and Iraq (39 per cent)—which may be driven by political considerations. Others, such as the Gulf states, Egypt, and Lebanon, were subject to a flat 10 per cent rate, possibly as part of broader American trade protection strategies. Jordan’s position is more vulnerable. With a 20 per cent tariff, it becomes one of the most heavily impacted Arab nations, after Syria, Iraq, Algeria, Tunisia, and Libya. This suggests that certain Jordanian products were specifically targeted, especially when compared to Gulf countries that were given relatively favorable treatment.

The 20 per cent tariff severely affects the competitiveness of Jordanian exports in the US, particularly when competing with similar products from the Gulf that now enjoy a pricing advantage. This shift could reduce Jordan’s share in key sectors, most notably in apparel. The clothing sector alone contributed over 1.5 billion dinars in exports to the US, representing nearly 70 per cent of Jordan’s total exports to that market. The new tariffs could result in a loss of about JD400 million from this sector alone.

Other key Jordanian exports—such as jewelry, fertilizers, pharmaceuticals, IT services, and food products—have a combined value of around 700 million dinars. Assuming unitary price elasticity of demand for these goods, the estimated reduction in these sectors could reach 140 million dinars. In total, Jordan may see its exports to the US decline by around JD550 million, or 25 per cent of current levels, representing a significant economic setback.

Globally, Trump's tariffs signal a broader move toward protectionism that is likely to slow economic growth. Higher import costs and restricted trade flows could have long-term effects on global output. According to the Global Trade Analysis Project (GTAP), these tariffs could reduce global nominal GDP growth by 1.4 per cent annually and real GDP growth by 0.06 per cent, while global price indices are expected to drop by 1.4 per cent, pointing to deflationary pressures. While the US may benefit in nominal terms—with GDP growth projected at 7 per cent and an improvement in its trade balance by $137 billion—these gains may come at the cost of increased inflation (8 per cent) and a decline in real GDP by 0.17 per cent.

Other economies will be affected differently. Canada is expected to suffer the largest GDP decline—around 17 per cent—while India, Mexico, and Vietnam are also likely to see slower growth. On the other hand, Latin America and the MENA region might benefit from trade diversion, with projected nominal GDP increases ranging from 1.7 per cent to 4 per cent. In contrast, East Asian economies, particularly China, Vietnam, and Cambodia, are expected to face multiple economic challenges as a result of the tariffs.

Despite the negative implications, Jordan may find potential opportunities in this situation. One of them is the diversification of export markets. Reducing reliance on the US by shifting exports toward Europe, the Gulf, and Asian markets could help stabilize Jordan’s trade outlook. Additionally, the high tariffs imposed on Chinese products might encourage US importers to look for alternatives. Jordan could benefit, especially in the textile and apparel sectors, due to its existing trade agreement with the US. Moreover, Jordan could use this moment to strengthen its domestic industries—especially energy, pharmaceuticals, and agriculture—through increased investment and innovation, thereby improving its global competitiveness.

In conclusion, while the US tariffs pose a serious challenge to Jordan’s export economy, they also present an opportunity to rethink trade policy, diversify markets, and invest in local industry. These steps could help Jordan build a more resilient and diversified economic future.

Raad Mahmoud Al-Tal is head of the Economics Department – University of Jordan- r.tal@ju.edu.jo