As the global economy undergoes strategic transformations and faces violent disruptions in stock markets due to the trade war initiated by President Donald Trump—who imposed sweeping tariffs on goods imported into the United States from several countries, particularly key trading partners like China, India, and the European Union (EU)—Egypt finds itself in a unique position.
Following these tariffs, China retaliated by raising tariffs on imported American goods by an additional 34%.
These tariffs have sparked fears of a global trade war, with over 180 countries and regions caught in the crossfire of reciprocal tariffs aimed at protecting American industries from foreign competition.
This has drawn severe criticism from world leaders who warned of negative repercussions for the global economy, emphasizing the need for decisive actions to address the economic threats posed by these tariffs, alongside calls for constructive dialogue to ease trade tensions and find fair solutions.
Egypt Among the Least-Affected Countries
Egypt is among the nations affected, facing a modest 10% tariff, prompting analysts to explore how Egypt can benefit from its relatively favorable tariff situation. This is particularly relevant given the free trade agreement and the Qualified Industrial Zones (QIZ) agreement, which allow Egyptian products to enter U.S. markets duty-free.
Analysts suggest Egypt adopt selective policies to maximize benefits from this prolonged trade war, emphasizing the need to localize advanced tech industries alongside traditional products. This approach is seen as a key pathway for economic development and a true value addition to Egypt’s economy, which is seeking growth opportunities amid ongoing trade and geopolitical challenges. Industries such as electric vehicles and semiconductor manufacturing are critical in this context.
According to analysts, the comprehensive tariff system imposed by Trump threatens disruptions for companies like Apple and Amazon, along with other American tech firms heavily reliant on manufacturing in China and other targeted countries. Concerns over demand collapse and supply chain disruptions—especially regarding China and Taiwan, major semiconductor manufacturers—have led to nearly $2 trillion in market value losses for the seven largest US tech companies.
A Silver Lining
This situation has sparked discussions about significant opportunities for several countries, including Egypt, to attract manufacturers, particularly in tech production. Egypt’s advantages include logistical ease for such factories, affordable labor, and a strategic geographic location as a stable hub for global trade. Additionally, the Egyptian government’s incentive policies to attract quality foreign investments and the establishment of numerous free zones, especially the Suez Canal Economic Zone, position the country favorably.
This could provide a pathway to alleviate sharp pricing pressures on many strategic goods worldwide, particularly in key export sectors such as semiconductors, electric vehicles, and electronic devices produced in millions of units daily.
In a broader perspective, Mohamed Abdin, founder of Corporate Stack Solutions, stated that the US decisions regarding increased tariffs should not be viewed merely as threats but as indicators for reshaping global supply chains, presenting a timely opportunity for countries capable of filling the gaps, with Egypt being one of them.
“The US has imposed tariffs of up to 34% on certain categories from China, while Egyptian products maintain a tariff rate around 10%, with some enjoying partial or full exemptions under the QIZ agreement or other bilateral arrangements. This opens up significant opportunities for Egypt to increase its share of exports directed toward the US market, especially in sectors where China has become less competitive due to tariffs, such as technology”, according to Abdin.
Stimulating local Manufacturers
Abdin also emphasized that rather than solely focusing on attracting foreign factories, a more immediate and realistic opportunity lies in encouraging Egyptian manufacturers to expand exports to the US and improve product quality to meet American standards. This involves directing a portion of their current or future production to meet the rising American demand for alternatives to Chinese products, alongside launching support programs for export expansion (financing, logistics, marketing) and enhancing collaboration with Egyptian commercial offices in the USto identify opportunities and analyze promising sectors.
He stressed that the golden opportunity now is not merely to wait for factories to relocate from China but to position Egyptian products in place of Chinese ones in the US market. This requires a strategic promotional and commercial campaign, emphasizing export as a strategic option rather than a reactive measure.
The government must convey clear messages to the private sector that the US market is more open than ever, but access is contingent upon strict adherence to quality and specifications. Additionally, logistical and direct financial support programs for serious exporters and a targeted promotional campaign in America to showcase Egyptian branding as a reliable and competitive source are essential.
Abdin highlighted the need to improve the local industrial environment by reducing production costs, streamlining licensing procedures, and lowering the tax burden on export-oriented industries, particularly in the tech sector, which represents a strategic gamble for the Egyptian state.
Tech is the Blackhorse
He noted that there are numerous technological fields from which Egypt can launch toward the American market, leveraging important existing capabilities, especially in assembling electronic and household devices. He pointed out successful prototypes such as Samsung, B.TECH, Tecno, and Beko factories.
He also mentioned that the software and technical outsourcing sectors could also benefit from this global situation, as they are active, flexible, and capable of expansion, particularly in services for American companies. Manufacturing cables and precision electrical components has also proven to be highly efficient in exporting to European markets and could be tailored for the American market.
Challenges on the Way
However, he pointed out several obstacles to fully capitalizing on this opportunity, including weak local supply chains, as most factories rely on importing foreign production inputs, limiting competitive opportunities. Furthermore, the scarcity of targeted industrial financing remains an issue, with banks prioritizing commercial projects over industrial ones. The absence of quality training programs linking technical education with advanced manufacturing and precise technology also hampers progress, alongside the instability of economic and trade policies, which is a sensitive factor for both investors and exporters.
Abdin emphasized that the human element is a critical foundation for executing the strategy of expanding tech industries. Although there is a large pool of potential talent, the challenge lies in quality and specialization. “We have many graduates from engineering and computer science faculties, but the skills gap between education and the job market remains significant,” he said, stressing the need to connect technical education with real-world training and initiate specialized programs in smart manufacturing, mechatronics, and precision electronic engineering.
He affirmed that the low exchange rate provides a temporary competitive cost advantage but is insufficient alone, given the rising operational costs in areas like energy, transportation, and taxes, which can undermine competitive advantages. Therefore, reliance on the exchange rate as an attraction tool should be complemented with structural reforms to ensure sustainability.
IT expert Mohamed Azzam stated that President Trump imposed these tariffs on countries worldwide to regain control over all industries and boost American exports. If he imposed a 10% tariff on Egypt, he could increase it at any time if he sees that we are beginning to attract companies and factories and export tech products. The situation is challenging for all countries, and no one knows what will happen next; for instance, the Hong Kong Stock Exchange has dropped by 12%, the steepest decline since 1997.
Attracting More of Tech Companies
He emphasized that Egypt must strive to attract companies for tech manufacturing and smart devices, which requires readiness for such a step, as smart industries are complex and not simple.
Azzam added that this approach necessitates having trained engineers and labor as well as top-notch research and development institutes, alongside research universities capable of supporting these companies. Competition is fierce, and companies will not relocate employees from abroad; they need to rely on local trained labor, which must be provided at the highest level.
He underscored the importance of developing the technological infrastructure that contributes to attracting such companies, particularly as they specialize in advanced industries and require comprehensive support. Furthermore, legislative frameworks must be established to attract foreign investments and companies, which will benefit the local market and increase Egyptian exports. The state has already taken numerous steps that can be built upon, both in technology and telecommunications, with the telecommunications sector being one of the most attractive for investments globally. Egypt is among the top countries in the MENA region for this type of investment, particularly due to its pool of talented and brilliant minds.
Seizing the Opportunity
Khalid Nagm, former minister of communications and information Ttchnology, stated that attracting tech manufacturing and technology companies is a primary goal for Egypt, regardless of the US decision to raise tariffs on many countries. However, in light of this decision, we must seize the opportunity to attract these companies, especially since we possess the capabilities to support this direction, including Egypt’s geographic location, its central position among world countries, and the proximity to global markets.
Additionally, providing a skilled workforce and talents that need further development and training, alongside the Suez Canal Economic Zone, which was established to attract foreign companies, presents an opportunity for Egypt to capitalize on this sector.
He added that the government must adopt measures to strengthen this direction, including providing adequate facilities for companies to establish and manufacture in Egypt, ensuring ease of operations, and offering suitable locations equipped with the necessary infrastructure. Training a skilled workforce and facilitating the establishment of data centers for these companies, similar to those abroad, are also critical to attracting companies, as this allows them to operate efficiently and provide their services from Egypt.
Nagm pointed out that Egypt has made progress in attracting electronic manufacturing companies, which can serve as a foundation for further development, as Egypt has contracted with global companies to manufacture parts of units and devices. The focus should now be on supporting and attracting these companies to manufacture complete devices, rather than just parts, and subsequently export from Egypt.
