For U.S. President Donald Trump, the GCC (Gulf Cooperation Council) countries are crucial to America’s economy and FDI. In his first term (2016 to 2020), Trump’s first trip abroad was to Saudi Arabia. In his second term, he added visits to the UAE and Qatar. 

According to a May press release from the White House, Trump’s 2025 GCC trip resulted in the signing of “investment agreements” worth more than $2 trillion for projects in the United States, Saudi Arabia, the UAE, and Qatar. 

Turning those agreements into active projects requires all four nations to remain in good economic health. The U.S. appears precarious, as data curator Trading Economics shows a net exit of American Treasury investors in April, while the Federal Reserve continues to anticipate inflation, refusing to lower interest rates that would help spur GDP growth.

Meanwhile, Gulf nations have their own worries. “Local pursuit towards diversification, U.S. Federal Reserve policy [due to their dollar-pegged currencies], and geopolitics will remain central to the near-term outlook for the GCC,” Scott Livermore, Oxford Economics Middle East managing director, said in January. “U.S. trade policy under …Trump adds [another] layer of uncertainty to the forecast.”

Transactions first

Retired Lt. Gen. Keith Kellogg, the president’s special envoy to Ukraine and Russia, noted, “President Trump approaches diplomacy and engages in a very transactional manner, with economics as the foundation and driving force behind international affairs,” he told the media in March.

According to Aamaer Madhani, Associated Press White House reporter, “For Trump, it’s about leverage, not friendship; dollars as much as values; and hard power versus soft.” 

Much of that was evident during his four-day trip to Saudi Arabia, the UAE, and Qatar, which “revealed a president with old habits — meaning into the fanfare and flattery and trappings of office,” reported Betsy Klein, CNN’s senior White House reporter. It also showed a “new streamlined, goal-oriented agenda heavy on dealmaking.” 

The visit

According to a May press release from the White House, the $2 trillion in deals signed “laid the foundation for investment, innovation, and good-paying U.S. jobs, including in frontier technologies, aerospace, energy, and critical minerals.”

In the UAE, the White House’s May Fact Sheet said the visit saw Trump secure $200 billion in new deals. The two governments also signed agreements to activate the “$1.4 trillion [over 10 years] commitment secured in March,” where the UAE would “invest in, build or finance U.S. data centers [and] align national security regulations with the United States.” 

In Saudi Arabia, Trump secured a $600 billion “investment commitment,” a May White House statement said. The Saudis committed nearly $14 billion to the U.S. Energy Investment Fund, New Era Aerospace and Defense Technology Fund, and Enfield Sports Global Sports Fund. The country also agreed to buy $142 billion worth of “state-of-the-art warfighting equipment and services from a dozen U.S. defense firms.”  

Lastly, Trump secured “economic commitments” worth $1.2 trillion during his stop in Qatar, $40 billion of which will be allocated to defense and military cooperation.

Ink to projects

With trillions of dollars in signed investment agreements, the key will be translating them into active projects. For the United States, the proverbial “elephant in the room” is whether its economy is strong and growing fast enough, with local companies generating high profits to create opportunities worth tens of billions of dollars for Saudi, Emirati, and Qatari investors. 

That is questionable, as the U.S. reported a 0.2% GDP contraction in the first quarter of 2025. That compares to a GDP expansion of 2.4% the previous quarter and 1.6% a year earlier. Joseph Lupton, a global economist at JP Morgan, sees America’s economy barely returning to growth through 2025. “We no longer see a U.S. recession, but expect headwinds to keep growth weak through the rest of the year.”

In May, a research note from JP Morgan stated, “Recent de-escalation of trade tensions” lowers the likelihood of a U.S. recession from 60% to 40% this year.

Their scenario “assumes a 39% tax on China and a 10% tax elsewhere, along with sector tariffs …  JP Morgan Research expects U.S. GDP to expand by just a 0.25% annualized rate in the second half of 2025,” Lupton said.

The other challenge facing the U.S. economy has been downgrades of its credit rating, which ultimately increases borrowing costs and lowers investor trust. In May, Moody’s dropped the U.S. sovereign credit rating one step from its highest Aaa. It explained its decision, saying Treasury debt and interest payments have reached “levels that are significantly higher than similarly rated sovereigns.”

Nathalie Moyen, a finance professor at Leeds School of Business, believes “this downgrade [is] particularly shocking [as] Moody’s had consistently rated U.S. debt as essentially risk-free since it first issued a rating in 1917,” she told the University of Colorado in an interview. “The U.S. maintained that top rating even through the Great Depression, World War II, and the Great Recession in 2008.”

Based on Moody’s reasoning, the U.S. credit rating may get worse as Trump’s proposed 2025 budget (aka “one big, beautiful bill”) will likely add $3.8 trillion to the deficit by 2035. In 2024, CNBC reported the deficit had reached $1.8 trillion, “the third highest on record.”

GCC getting cold feet?

The “one big, beautiful bill” imposes “new levies on sovereign wealth funds and other foreign investors” investing in the U.S., reported Valentina Pasquali, a senior editor for Arabian-Gulf Business Insights, a news portal.

While experts told Pasquali such taxes are “unlikely to harm GCC-based entities directly, [they] could have enough knock-on effect on the global attractiveness of U.S. assets to convince large Gulf players to reassess their strategies after they pledged trillions of dollars in new investment in the U.S.”

Tariffs are another significant issue that could prevent GCC nations, especially the UAE, from fulfilling their commitments. A survey by HSBC in April found “65% of UAE-based companies … reported rising operational costs linked to [Trump’s] tariffs.” Trump didn’t address the topic during his visit or afterward.

Nevertheless, Vijay Valeche, Chief Investment Officer at Century Financial, noted that GCC nations may have an advantage over other exporters to the U.S., as oil prices in the region are at their lowest. “Production of … metals is energy-intensive, so having access to cheap energy helps them stay competitive, even with added tariffs,” he said. 

Pasquali said a consequential decision faces Saudi Arabia, the UAE, and Qatar that could redefine the region’s economic ties and allegiances. “The ongoing adoption across almost all the GCC of the OECD’s global minimum corporate tax of 15% could, in theory, represent a source of exposure for the region,” she reported. “The levy is among those listed in [Trump’s proposed budget] as automatically rising to the level of ‘unfair.’” 

That means the Saudi, Emirati, and Qatari governments might have to choose between securing a low-tariff deal with the U.S. and rolling back their commitment to the OECD or staying the course and accepting a less favorable deal from Trump.

“Raising taxes on nearly all the world’s investors at the same time seems far-fetched at the moment,” Pasquali stressed. However, she noted, “Trump has already demonstrated a willingness to push boundaries.”

This article first appeared in July’s print edition of Business Monthly.