Against expectations of a closely fought US presidential race, Republican President-elect Donald Trump has won the 2024 presidential election and will lead the executive branch of government for four more years. For the next two years, Republicans will have a clear majority in America’s legislative branch (Senate and House of Representatives), meaning almost all legislation Trump wants will likely pass.
The election results raise concerns about the US economy. “We are in the soft landing [during the current administration],” Nobel Prize-winning economist and Columbia University professor Joseph Stiglitz said at Yahoo Finance’s annual November Invest conference. “That ends Jan. 20,” when Trump will be inaugurated and use executive orders to lay the groundwork for his protectionist “Make America Great Again” slogan and “America First” agenda.
Stiglitz and others worry the resulting policies will ultimately raise consumer prices and production costs for domestic manufacturers that rely on imports. That could require raising interest rates to curb the resulting inflation, leading to slower GDP growth.
Those domestic disruptions will invariably spill over to other countries, as the United States is the world’s largest importer and second largest exporter, according to US government data.
Adding more volatility in the coming four years is that Trump said everyone knows he is “crazy” when the BBC asked him in October how he would see a Chinese invasion of Taiwan, a move not in the economic interests of the United States. “I would say: if you go into Taiwan … I’m going to tax you at 150% to 200%,” the BBC reported. Currently, rates stand between 25% and 100%, according to official data.
For Egypt, some analysts believe the Republican-controlled executive and legislative branches will further strengthen Egypt-U.S. ties and the former’s political standing in the region.
However, two factors differ from Trump’s first term. One, over the past four years, Egypt has increasingly strengthened its ties with China and other nations that oppose US interests. Second, Trump will be more focused on jumpstarting local industry at the expense of foreign manufacturers selling in the US, which will likely jeopardize Egypt’s foreign currency inflows from exporting to the world’s largest economy.
Strategic ally
Strong economic and political relations between the United States and Egypt go back a long time. According to Reuters, the latter received over $71.6 billion in aid between 1948 and 2011, making it the second-highest recipient after Israel.
Sherif Azer, the assistant secretary general for the Egyptian Organization for Human Rights, told The New Arab, a news portal, “Egypt has already established strong ties with the U.S. since entering into a peace treaty with Israel in the late 1970s … no Egyptian or American president will change that.”
Those relations flourished during Trump’s first term as president. He invited Egyptian President Abdel Fattah el-Sisi to the White House twice, something neither Trump’s predecessor nor his successor did. At a 2019 media event in France, Trump said Sisi was “a friend of mine for now a long time … from even before the campaign.” Trump also has refrained from criticizing Egypt’s government and did not threaten to reduce aid to Egypt, something his predecessor and successor were vocal about.
In all likelihood, Egypt-U.S. relations during Trump’s second term will pick up where they left off in 2020. This time, Sisi will need even more support than he did during Trump’s first term. “The Sisi regime is going through a series of complex [local] crises,” said an investigative report by Middle East Monitor published in November. Most “notable [are the] deteriorating economic situation, collapse of the local currency, [and] the exacerbation of external debt,” which has quadrupled since Sisi took office.
Egypt also is threatened by external geopolitical and existential threats, including escalating conflicts in the Gaza Strip and Lebanon, a potential regional war, civil war in Sudan, Ethiopia’s attempts to reduce Egypt’s share of Nile water, massive drops in Suez Canal freight traffic and political uncertainty in Libya.
“Sisi believes Trump’s return to the White House will secure him more political and financial support through international financial institutions and Gulf capital, as a reliable ally who must be supported,” said the report. That expected support should “relieve external pressure on [Sisi] regarding reforms in his country.”
Another benefit Egypt should enjoy in a second-term Trump administration is that “by focusing on the Abraham Accords [which normalized relations between the GCC and Israel in Trump’s first term], Trump could inadvertently grant Egypt free rein to cement its role as a significant player in Horn of Africa geopolitics,” reported Nosmot Gbadamosl, a journalist at Foreign Policy’s Africa Brief.
Rising barriers
Despite the benefits Egypt stands to reap in Trump’s second term, it could face fallout from protectionist policies that make a “manufacturing renaissance [the] centerpiece of his economic plan,” Reuters reported in September.
Trump promised “incentives to encourage companies to relocate to the United States,” said Reuters. They include “low taxes and little regulation.” Throughout his 2024 campaign, Trump touted dropping the corporate tax rate to 15% from the current 21%.
He also plans to make imported goods more expensive by levying new and higher tariffs “to make American-made products more appealing,“ reported Bailey Schulz, a journalist for USA. Today, in November. In August, Trump proposed a 20% universal tariff on imported goods, up from the 10% he floated in March.
That could significantly decrease Egypt’s exports to the United States, which reached $3.4 billion in fiscal year 2022/2023 — almost 4.7% of Egypt’s total exports, according to the U.N. Commodity Trade Statistics Database (COMTRADE).
Also at risk for Egypt in a second Trump term is aid from USAID, which reached $15 billion over the years, a portion in women-led projects. “A Trump USAID will [likely] fire more … gender advisers [who] integrate gender and advance gender equality objectives in USAID’s work worldwide,” Laura Thornton, the senior vice president for democracy at the German Marshall Fund, wrote in Foreign Policy in February. “He could also order the scrubbing [of] the words gender, gender equality, [and] gender equity from all documents.”
Back-to-basics market?
US-based manufacturers are “looking forward to expanded tariffs,” reported Schulz. Drew Greenblatt, president of Marlin Steel, a manufacturer, told USA Today in September, “It’s going to be great for all American factories throughout the United States.”
However, not everyone is celebrating those potential additional tariffs. US-based sellers and manufacturers relying on imports to operate say rising prices would be inescapable. “There are a lot of things we can’t make or don’t make here, and probably will never make,” Stephan Liquori, founder and CEO of apparel manufacturer Goodwear USA, told USA Today in November.
The Peterson Institute for International Economics, a think tank, estimated Trump’s proposed tariffs would increase costs to typical American households by $2,600 annually. A report from the National Retail Federation estimated Americans’ total consumer spending would rise between $46 billion and $78 billion.
“That is a concern,” Matt Bigelow, president of Vermont Flannel, told USA Today. For one, disposable income will invariably decrease as households allocate bigger budgets to buying basics at the expense of “nice-to-have” purchases.
Political fork
Politically, the big challenge facing Egypt’s current administration is to maintain balanced economic and political relations with the United States under Trump on one side and China (Egypt’s largest supplier of imported goods) and Russia (Egypt’s biggest supplier of oil and grains) on the other.
The United States gives Egypt an annual $1.3 billion military aid package, offers regional political support and FDI, and support when negotiating with the IMF and US funding institutions. The United States also is Egypt’s second biggest supplier of imported products and fifth biggest destination for Egypt’s exports, according to COMTRADE. Egypt also has the Qualified Industrial Zones agreement with the United States that allows customs-free entry to America. Apparel and textiles account for nearly 89% of exports under that agreement, according to AmCham Egypt’s research. Frozen foods make up nearly 10%.
Despite those close ties, the current Egyptian administration has gradually increased its economic and political relations with countries unfriendly to the United States. In 2024, Egypt joined the Brazil, Russia, India, China and South Africa (BRICS) coalition, which wants to abandon the dollar in international transactions.
Until now, the US administration has not asked Egypt to take sides in its ongoing feud with China or any other conflict. However, that may not continue under Trump if he makes “crazy” decisions to hurt China’s economy or global political standing.
Brazil has faced such a situation. Its economy relies heavily on the United States. State Department data show America is Brazil’s second-largest trading partner and the biggest investor in the country. Brazil also enjoys less bureaucracy when entering the US market thanks to the Agreement on Trade and Economic Cooperation.
Yet in October, the Brazilian government announced it was considering joining China’s $1 trillion global One Belt One Road infrastructure initiative, as both are founding nations of BRICS.
The US response was immediate and aggressive. Weeks after Brazil’s announcement, top trade negotiator Kathrine Tai “suggested Brazil should consider the risks of joining China’s Belt and Road Initiative before making any final decision regarding the Asian country’s massive infrastructure program,” Bloomberg reported
The agency quoted Kai as saying she “would encourage … friends in Brazil to look at the risks in today’s economy [through] an objectivity lens … a risk management lens, [and to] really think about what the best pathway is forward for more resilience in the Brazilian economy.” “It’s in Brazil’s economic interest not to choose sides in this feud between its top two trade partners,” she stressed.
In early November, the South China Morning Post reported Brazil’s government backtracked on joining the One Belt One Road initiative. Three weeks later, O Globo, a Brazil-based news portal, reported Brazil and China signed “37 agreements … across various sectors [unrelated to] the Belt and Road Initiative.”
Ultimately, experts talking to The New Arab believe Egypt would side with a Trump-led America. “Both Trump and Sisi have always gotten along very well,” Said Sadek, professor of peace studies and human rights at Egypt-Japan University, told The New Arab. “Sisi is known for having better relations with Republicans than Democrats.”
This article first appeared in December’s print edition of Business Monthly.
