The MENA’s Small Businesses And The New Global Trade Reality

In April this year, the US, under President Donald Trump’s administration, rolled out sweeping new tariffs, including a 10 percent baseline on most imports, with duties up to 50 percent on imports from specific countries. Global trade dynamics are thus once again being reshaped—and small businesses in the MENA region aren’t immune. 

From rising costs to disrupted supply chains, startups and SMEs in the region now face a complex, evolving challenge. In light of this situation, Inc. Arabia asked stakeholders in the region’s business ecosystem to weigh in on the direct and ripple effects of the new tariffs.  

Through interviews with Dr. Tamer Alsayed, CFO of the Riyadh-based Future Investment Initiative (FII) Institute, Khamis Soliman, CEO of Dubai-based Canater, Fasih Ullah, co-founder and Director of IT at Tripoli-headquartered Alkremeya App,  and Rodrigue Nacouzi, CEO of Dubai-born Transcorp International, we gathered insights on how these tariffs are affecting supply costs, competitiveness, and strategic planning, while also highlighting how resilience and innovation can help small businesses navigate uncertain waters. 

A Mixed Bag of Impacts 

The imposition of US tariffs, which went into effect on April 5, 2025, has the potential to introduce significant challenges for SMEs across the MENA region. According to PwC’s Impact of the recent US Tariff Decisions on Middle East Businesses: What to do now? report, countries like the UAE and Saudi Arabia face a 10 percent tariff, while others such as Iraq (39 percent) and Syria (41 percent) are subjected to even higher rates.  

This escalation in trade barriers is reshaping the regional business landscape, compelling SMEs to reassess their strategies and operations, especially those reliant on imports and exports with the US market. Sectors like manufacturing and tech hardware, which depend heavily on imported components, are particularly vulnerable. Indeed, the added financial burden may erode profit margins and hinder competitiveness. 

However, the impact varies across the region. GCC countries, with their substantial sovereign wealth and diversified economies, are better positioned to absorb these shocks. Their strong investment hubs and strategic economic planning provide a buffer against immediate disruptions. In contrast, non-GCC nations with less diversified economies may experience more pronounced effects, including potential declines in exports and economic growth. 

The direct effects of US tariffs on small businesses in the MENA vary significantly based on geography, sector, and sourcing models. For those relying on global suppliers, the knock-on effects are more complex. “Tariffs, especially those imposed by the US on China, or reciprocal tariffs involving European or Asian players, don’t just stay on one continent,” Dr. Tamer Alsayed, CFO at FII Institute, a Riyadh-based think tank focused on economic and investment research in the MENA region, tells Inc. Arabia. “They ripple through the global economy.” 

Dr. Tamer Alsayed, CFO at FII Institute. Courtesy of FII Institute.

According to Alsayed, there are growing concerns that the broader effects of global tariff shifts could hit local businesses harder than initially expected. “Many rely on imported tech, electronics, machinery, or even packaging from tariff-affected countries,” Alsayed explains. “Startups with razor-thin margins can’t easily absorb a 15–25 percent spike in component costs. Even if the region isn’t directly hit by US tariffs, the inflationary effect on global supply chains is real. MENA startups feel it through higher prices, longer lead times, and squeezed working capital.” 

Rodrigue Nacouzi, CEO of Transcorp International, a Dubai-headquartered smart cold-chain logistics provider serving cross-border e-commerce and local quick-commerce players across the GCC, echoes that sentiment, pointing to the indirect pressures felt across the logistics ecosystem. “US tariffs inevitably introduce an element of unpredictability and increased costs in global supply chains,” Nacouzi notes. “Many of our clients rely on imported goods or raw materials from the US, and the tariffs tend to cascade into higher product prices or delayed shipments. For Transcorp, while we are not a direct importer, we serve clients whose supply chains are impacted. This means we must adapt our logistics solutions to maintain cost efficiency and service quality despite these external pressures.” 

Sectors On the Frontline 

From Alsayed’s perspective, two sectors stand out as especially vulnerable to the effects of global trade tensions. “[These include] manufacturing and light assembly, especially in Saudi Arabia, Egypt, and Jordan, which rely on imported machinery, parts, or raw materials,” he notes. “These firms can’t pass on costs easily, so margin erosion is brutal.” This is a critical concern for smaller firms that lack the pricing power of larger competitors and must absorb the shocks internally, he adds. He also highlights rising risks for tech-sector startups, especially those in hardware-focused fields like internet of things (IoT) or cleantech that rely on imported components such as sensors, chips, or batteries. “With US–China chip tensions escalating, delays and costs are becoming existential risks,” Alsayed says. 

Khamis Soliman, CEO of Canater, a UAE-based company providing end-to-end value chain solutions for consumer-packaged goods manufacturers expanding globally, flags the growing influence of sanctions and tariffs on cloud-based operations. “Yes, trade tensions and sanctions are increasingly affecting cloud infrastructure, hosting, and software tools, with both direct and indirect consequences for businesses worldwide,” Soliman explains. Though cloud services are often viewed as resilient, he cautions that “businesses must be aware of the indirect impacts of trade tensions and sanctions.” 

Alsayed also highlights the growing indirect challenges. “US tech export controls have already impacted access to high-end chips, AI tools, and some cloud services in certain regions,” he points out. “In the MENA, this translates into higher costs for hosting (if US servers are restricted), licensing delays, or vendor instability. Case in point: following sanctions, several MENA startups using global software-as-a-service (SaaS) providers experienced service disruptions or unilateral contract terminations due to jurisdictional exposure.” 

One solution, according to Alsayed, is to “build digital redundancy”. Use multi-cloud strategies (e.g. Amazon Web Services + regional providers like STC Cloud). Choose vendors with data residency in the MENA, especially as digital sovereignty gains ground. Cloud may be borderless in theory, but in geopolitics, even the cloud gets caught in the crossfire.” 

Turning Disruption Into Direction 

Tariffs and trade uncertainty may unsettle some, but for a growing number of entrepreneurs in MENA, they serve as a catalyst for strategic change. Rather than waiting for conditions to stabilize, forward-thinking founders are treating disruption as an opportunity to rethink how and where they do business. “The smartest founders I know don’t just react to tariffs, they redesign around them,” Alsayed notes. “That means moving from panic to planning." 

Alsayed suggests that businesses here need to focus on expanding their supplier base within the region rather than solely relying on global options. He also says that they need to move away from sourcing only from China, and consider alternatives like Turkey, India, or Eastern Europe. “The UAE’s non-oil trade with Turkey, for example, grew by 40 percent post the COVID-19 pandemic—there’s a reason,” Alsayed points out.  

Plus, he recommends proactive financial strategies. “Negotiate foreign exchange-adjusted pricing with suppliers to avoid double exposure, tariff risk, and currency volatility,” he shares. To reduce shipping costs, Alsayed recommends leveraging freight consolidation and digital freight platforms. Additionally, amid rising costs and shifting trade dynamics, Alsayed sees adaptability as everything. “Most importantly, startups need to treat supply chain strategy like a product: always iterating, always optimizing,” he says. 

Rodrigue Nacouzi, CEO of Transcorp International. Courtesy of Transcorp International.

Canater’s Soliman notes technological integration as a critical factor. “The adoption of artificial intelligence (AI) and other affordable technologies is improving efficiency and reducing costs,” he says, while also highlighting the important role of regional trade agreements. “Favorable trade deals within the GCC and with other MENA regions help mitigate tariff impacts and open cross-border markets with the region itself,” he says. Additionally, Soliman highlights the strategic geographic advantage of the MENA region amid these global shifts. “Strategically positioned at the crossroads of major trade routes, countries like Saudi Arabia, the UAE, Egypt, and Morocco are leveraging their infrastructure and geographic advantages to navigate rising costs and shifting trade dynamics,” he says. 

Meanwhile, businesses across the MENA region are already adapting to the ripple effects of the new tariffs, says Transcorp’s Nacouzi. “Many small manufacturers face significant challenges as tariff-related cost pressures squeeze their margins,” he says. “Some have responded by increasing prices, which can affect their competitiveness. Others are actively rethinking their supply chains, seeking alternative sources outside the US or exploring regional suppliers. We have observed a growing emphasis on supply chain diversification and increased inventory buffering to manage uncertainties.” 

Nacouzi underscores a similar shift in mindset among logistics operators adapting to indirect shocks. “While Transcorp’s direct exposure to US tariffs is limited, the ripple effects are significant,” he says. “Some of our suppliers and clients have had to revise their sourcing strategies or absorb increased costs, which can impact demand patterns and delivery schedules. To adapt, we are doubling down on optimizing route planning, increasing operational efficiency, and leveraging technology to reduce waste and delays. On top of that, we have been exploring alternative supplier networks and forging new regional partnerships to mitigate risks linked to tariff-induced supply chain disruptions.” 

Beyond The Label 

Long before recent trade tensions and tariffs reshaped global markets, MENA nations were already investing in initiatives to strengthen local manufacturing and promote national brands. For instance, the “Made in UAE” program focuses on elevating Emirati products through quality certification and export support, while “Made in KSA” aims to drive Saudi Arabia’s economic diversification by encouraging domestic production and innovation. Both initiatives seek to boost regional supply chain resilience and reduce reliance on imports. 

According to Fasih Ullah, co-founder and Director of IT at Alkremeya App, a Libya-based B2B e-commerce platform for grocery supply chains, there is value in focusing on strengthening local ecosystems. “These initiatives are valuable,” he shares. “We believe that boosting local manufacturing in the UAE, Saudi Arabia, and other parts of the MENA can help reduce dependency on international imports and build more resilient regional supply chains. It’s an opportunity for both startups and investors to focus on localized production and sourcing.” 

FII Institute’s Alsayed adds that localization can be accelerated through smart policy. “Public procurement programs can be structured to favor locally made products and services,” he says. “Governments can play a critical role in stimulating demand and ensuring regional production scales up.” Transcorp’s Nacouzi echoes this sentiment, viewing the localization push as both timely and transformative. “The drive toward boosting local manufacturing under ‘Made in UAE’ and ‘Made in KSA’ is a strategic gamechanger,” he says. “It reduces reliance on global supply chains that are vulnerable to tariffs and geopolitical tensions. Fostering local industries shields businesses from tariff volatility while stimulating regional economic growth and innovation. For logistics providers like Transcorp, this trend creates opportunities to design more streamlined, regionally focused supply chains with shorter lead times and greater resilience.” 

However, Canater’s Soliman cautions against leaning too heavily on where a product is made, and recommends that founders focus on quality instead. “While a 'made-in' label can evoke national pride and offer a competitive edge in domestic markets, its influence may not be as pronounced internationally,” he points out. “In global markets, consumers often prioritize product quality, packaging, and alignment with their personal values over the country of origin." 

Khamis Soliman, CEO of Canater. Courtesy of Canater

Strategies For Resilience 

According to Alsayed, small businesses across the MENA can better withstand global trade disruptions by following a clear and actionable framework. “Startups and small businesses in the MENA should focus on four key strategies: localization and backward integration, government support through procurement and incentives, building flexible and redundant procurement/logistics networks, and adopting digital supply chain platforms to gain real-time visibility and control,” he shares. 

For Alkremeya’s Ullah, the pillars are already reflected in the operational priorities of his enterprise. “We are proactive in building a diversified supplier base to remain insulated from global disruptions,” he says. “Our focus remains on market expansion and operational scalability within the MENA region.” Soliman emphasizes the importance of supply chain agility too. “Manufacturers are expanding their supplier networks beyond traditional sources,” he points out. “This approach reduces dependency on high-tariff countries and enhances supply chain resilience."  

Soliman also describes the current situation as twofold. “While US tariffs present a short-term opportunity for MENA exporters, long-term success hinges on a deep understanding of local consumer needs and navigating the complexities of distribution networks, rather than temporary advantages,” he notes. Emphasizing adaptability, Soliman similarly points to technology as a key enabler of resilience. “Cloud-based systems offer scalability, cost-effectiveness, and real-time insights—critical in a region where market conditions and regulations can shift rapidly,” he adds. Nacouzi agrees, while adding that “access to affordable financing and advanced logistics remains critical to help these businesses navigate cost volatility effectively.” 

Additionally, both Alsayed and Soliman note that in an increasingly complex trade environment, digitization has become non-negotiable for MENA businesses aiming to stay competitive, with both underscoring the transformative role of cloud-based platforms and real-time data in enabling faster decisions and operational resilience. “Technology enables flexibility,” Alsayed says. “Cloud-based supply chain platforms provide real-time visibility, allowing businesses to pivot quickly and make informed decisions.” 

At the end of the day though, Soliman, Nacouzi, and Alsayed all agree on one thing: business models that don’t rely on imports or physical infrastructure are thriving. “Asset-light, service-first models tend to outperform in a tariff-constrained world,” Alsayed notes. “SaaS platforms, fintech enablers, logistics-as-a-service—these businesses aren’t exposed to shipping containers or customs duties.” Building on this idea, Alsayed highlights other resilient business models that can better withstand tariff pressures—much like how they adapted during the slowdown during the COVID-19 crisis. He cites Cairo-based MaxAB (now MaxAB-Wasoko), a B2B e-commerce platform, as a prime example. “They thrived by focusing on digital inventory aggregation instead of owning physical stock,” he says. “The lesson? Reduce exposure to tariff-impacted touchpoints in your value chain.” 

For Alsayed, other models that tend to perform well include on-demand manufacturing, subscription services—whether fully digital or a hybrid of physical and digital—and businesses that emphasize intellectual property while keeping logistics minimal. Since tariffs primarily target tangible goods and shipments, companies with intangible or highly localized operations are better shielded from such trade disruptions. 

Fasih Ullah, co-founder and Director of IT at Alkremeya. Courtesy of Alkremeya.

What Founders Really Need 

While financing is often the go-to recommendation during economic shocks, all three leaders agree that startups need more than just money to stay afloat and grow. “Rather than loans or financial assistance, we would benefit from investor interest in platforms like Alkremeya and in local manufacturing,” Ullah says. He notes that this includes “better access to reliable infrastructure and supplier networks, and policies encouraging private sector investment in regional supply chain development." 

Alsayed echoes this, calling for targeted, long-term support mechanisms. “What’s needed is patient capital and public-private partnerships to build local capabilities,” he says. "Governments can offer funding or tax incentives for businesses that set up local operations, facilitate technology transfer partnerships, and fast-track regulatory approvals for localized manufacturing.” 

Nacouzi notes the need for multifaceted support, emphasizing that, “support in the form of financial incentives, such as subsidies or reduced tariffs on critical raw materials, could alleviate some pressures on small businesses.” He adds, “Governments and free zones can also play a vital role by facilitating easier access to technology, training, and infrastructure upgrades, empowering manufacturers to improve efficiency and adapt supply chains. Trade bodies should advocate for regional trade agreements that lower barriers and foster collaboration, creating a more resilient and integrated market ecosystem for SMEs.” 

Looking Ahead 

According to Soliman, this moment of global trade recalibration is prompting a shift in mindset—one where resilience must align with long-term competitiveness. “MENA manufacturers are not only adapting to current challenges, but they are also positioning themselves for sustained growth by capitalizing on their strategic location, infrastructure investments, and regional expansion,” he says. 

That inward shift, says Ullah, could be the region’s real edge. “There is an opportunity for MENA businesses to strengthen intra-regional trade and reduce reliance on distant markets,” he explains. “With trade agreements in place across the MENA and with nearby regions, startups can build agile supply networks and benefit from localized production. This shift can attract more investment into both tech-driven platforms and manufacturing capabilities.” 

For MENA’s small businesses, the new trade order may thus not be about playing catch-up, but about playing it smarter. The challenge now is to seize the moment—and shape what comes next.