Egypt must fast-track reforms to offset US tariff shock, says ECES

Egypt must implement urgent and sweeping institutional reforms to protect its exports and investment climate in the face of newly imposed US tariffs, the Egyptian Centre for Economic Studies (ECES) said on Tuesday.

Speaking at a seminar titled How is Egypt likely to be affected by the new tariffs imposed by Trump?, ECES Executive Director Abla Abdel Latif warned that the new US tariff regime, including a 10 per cent ad valorem duty on Qualified Industrial Zones (QIZ) exports and a 25 per cent tariff on steel and aluminum, will significantly erode Egypt’s competitiveness—especially in the ready-made garments sector, which makes up nearly half of Egypt’s non-oil exports to the United States.

“These tariffs could act as a tsunami for Egypt’s already fragile export structure,” Abdel Latif said, adding that the country’s garment industry will struggle to maintain its price edge under the new duty structure.

Tariff Breakdown

According to ECES, the new measures include:

• A 10 per cent ad valorem tariff on all Egyptian exports not covered by preferential trade programmes
• A 10 per cent tariff on QIZ exports
• A 25 per cent tariff on aluminum and steel
• Most Favoured Nation (MFN) tariffs on certain raw materials such as graphite and phosphate
• Potential use of non-tariff barriers (NTBs), such as VAT compliance, data transfer restrictions, and halal certification standards

Structural Gaps, Underused Potential

While Egypt has longstanding trade agreements with the US, including QIZ and TIFA, ECES noted that the country has failed to capitalise on zero-duty access. Egypt’s share of the US garment market remains minimal, despite 99 per cent export potential realisation in that sector—highlighting deeper competitiveness issues.

Other sectors remain vastly underutilised. ECES estimates that Egypt currently taps just:

• 19 per cent of its export potential in fertilisers
• 2 per cent in machinery
• Despite strong demand from the US market

“Even before the tariffs, we were unable to compete effectively,” Abdel Latif said. “Now, we risk falling even further behind.”

Global Context and Domestic Challenges

Abdel Latif highlighted that the new duties are expected to negatively affect the global economy, including the US itself. While China will experience some impact, it will be relatively limited, given that its exports to the US represent less than 14 per cent of its total exports. In contrast, smaller economies heavily dependent on the US market, such as Mexico and Canada, will bear a larger brunt. Furthermore, the rise in global protectionism will disrupt supply chains and shift focus away from other pressing global issues, including climate change and conflicts.

As for Egypt, Abdel Latif said the country faces domestic hurdles flagged by US trade officials, including restrictions on imports, customs inefficiencies, lack of IP enforcement, and cumbersome investment regulations.

Reform Recommendations

ECES called for a rapid rollout of institutional reforms to reduce logistical bottlenecks, streamline customs processes, and restore investor confidence. Using AI modeling, ECES found that:

• Improving port efficiency to match Cairo International Airport could raise garment exports by 25.9 per cent
• Simplifying customs paperwork could reduce clearance time by 62.8 per cent and boost exports by 21 per cent
• Reducing export rebate payment delays from 14.7 months to 15 days could raise exports by 3–6 per cent

“The country must act quickly,” Abdel Latif said. “No matter what scenario unfolds—immediate implementation, retaliation, or rollback—Egypt’s only option is deep, fast reform to stay competitive and attract new investment.”

Attribution: Amwal Al Ghad English