How Trump’s new tariffs could reshape Egypt’s economy

Pound and stock market slide highlight early warning signs

Egypt is already feeling the heat from the global trade turbulence triggered by the United States’ sweeping new tariffs. With the Egyptian pound tumbling to a record low of 51.72 against the U.S. dollar and the Egyptian Exchange (EGX) indices posting sharp losses, local markets are reacting swiftly to a shifting international economic landscape.

The immediate effects came in the form of capital flight and currency volatility. Between Sunday and Wednesday, the EGX30 index dropped by more than 3 percent, while the pound hit its lowest value since last year’s devaluation.

Although a minor rebound was seen mid-week, the broader outlook remains uncertain, especially as investor confidence wavers in the face of rising global protectionism.

Egypt's exports to the U.S. face a new challenge

Among the most pressing issues is the inclusion of Egypt in the Trump administration’s latest tariff package. Under the new rules, Egyptian goods entering the U.S. will face a 10 percent tariff — a stark departure from the previous trade dynamic, particularly under the Qualifying Industrial Zones (QIZ) agreement.

The QIZ framework, established in 2004, allows Egyptian products to access the U.S. market tariff-free, provided they contain a specific percentage of Israeli input. While this agreement remains intact, some QIZ exports have now been pulled into the tariff umbrella, casting doubt over Egypt’s trade competitiveness in sectors such as textiles and food processing.

According to Yahya Elwathik Bellah, head of Egypt’s Commercial Service, negotiations are underway to remove these tariffs in exchange for addressing U.S. concerns in agriculture, logistics, and regulatory transparency.

A threat — and an opportunity — for manufacturing strategy

While the immediate impact of the tariffs is negative, Egypt may find a silver lining by repositioning itself as a regional manufacturing base.

As global companies — especially from China, Turkey, and Vietnam — search for ways to bypass rising trade barriers, Egypt has emerged as a potential low-cost, tariff-buffered production hub. The Ministry of Investment is actively courting investors who may consider setting up export-oriented facilities to leverage Egypt’s trade agreements with the U.S., EU, and Africa.

Elwathik Bellah confirmed that Chinese delegations will visit Egypt in the coming months to explore these possibilities. Such a shift could open the door for Egypt to host re-exporting factories targeting the U.S. market, effectively turning short-term trade pain into long-term industrial gain.

Government gears up for economic defense and reform

In response to the growing volatility, Prime Minister Mostafa Madbouly has emphasized Egypt’s readiness to defend economic stability. During a press conference this week, he outlined a government plan to fast-track key initiatives — including the launch of the Egyptian Commodity Exchange and the sale of high-value state-owned properties — to inject liquidity and maintain investor confidence.

The government’s Economic Ministerial Group has also been tasked with drafting contingency scenarios to mitigate the fallout from global trade disruptions. These include stockpiling basic goods, reducing dependency on imports, and accelerating industrial localization efforts.

Global trade realignment could alter Egypt’s export map

The ripple effects of the U.S. tariff escalation — particularly China’s retaliatory 84 percent tariffs and the EU’s countermeasures — are creating a broader environment of uncertainty. With traditional supply chains breaking down, Egypt has a rare chance to diversify its export markets, deepen African and Asian trade ties, and reposition itself within new economic alliances.

The key challenge will be maintaining competitiveness while inflation and foreign exchange pressures persist. The pound’s weakness could help exports, but it also threatens to raise the cost of raw materials and imported goods — especially critical for a country still reliant on foreign inputs for manufacturing and infrastructure development.

What’s next: risks, resilience, and regional ambition

Egypt now stands at a crossroads. On one path lies the risk of being squeezed between global giants in a widening trade war, with short-term pain in its currency, stock market, and export sectors.

But on the other path, there's a strategic opportunity to harness this crisis as a catalyst for industrial reform, foreign investment, and regional leadership in low-cost manufacturing.

If Egypt can execute the right policies — resolving trade inefficiencies, simplifying regulations, and courting international partners — it could turn a moment of global protectionism into a launching pad for economic transformation.