US President Donald Trump’s tariffs on Canada and Mexico were over before they even started, courtesy of some cosmetic concessions. Those on China look more serious: the opening shots of a bigger trade war.
Even if a promised meeting between Chinese leader Xi Jinping and Mr Trump yields fruit, further confrontation is only postponed.
The US imposed a 10 per cent tariff on Chinese goods, on top of existing levies. In his election campaign, Mr Trump had promised a 60 per cent charge on all Chinese imports. The pretext is China’s provision of precursor chemicals used to make the drug fentanyl; the obvious reason is superpower rivalry.
Beijing responded by imposing tariffs of its own: 15 per cent on US coal and liquefied natural gas, 10 per cent on crude oil, among targeted goods. They cover between $14 billion to $20 billion of US goods − or less than 10 per cent of China’s imports from its trans-Pacific rival in 2023.
There are also export curbs on critical minerals, such as tungsten, antimony and indium and some graphite products, and technologies related to lithium, gallium and rare earths. These have various applications in batteries, electric motors, semiconductors and other key technologies.
If there is to be a trade war, neither country is entering in a very favourable position
Overall, China’s response is quite measured and moderate. But its tariffs would make US energy sales to China completely unviable, given the abundance of competitive alternatives. China has gorged on Russian oil since Europe banned it following the invasion of Ukraine in 2022. Though China was still a significant importer of US crude last year, buying 220,000 barrels per day on average, that was down from 411,000 bpd a year earlier, and China is only the US’s sixth biggest customer. Beijing bought just 2 per cent of its oil imports from the US.
Former US president Joe Biden imposed new sanctions on Russian oil on his way out of the door, and the US has also returned to threats of “maximum pressure” against Iran, whose only real customer for oil is China. It will be hard to push Beijing on petroleum trade on three fronts.
The US is also far behind Australia, Qatar and Russia as a provider of liquefied natural gas to China; even less important when considering the imports of gas by pipeline from Russia and Turkmenistan. China was important as a fast-growing LNG consumer, creditworthy and able to sign long-term contracts to underpin construction of new US liquefaction plants, but that prospect had already faded in Mr Trump’s first term.
The Gulf countries and Iraq will easily be able to fill in any gaps in China’s LNG and oil procurement as US buyers are pushed out of the market. Adnoc’s new LNG plant at Ruwais has already signed up most of its output, including one deal with China’s ENN, but it could see further opportunities. Even more, Qatar will gain: it has still to sell a large part of the intended production from its huge ongoing expansion, and it has brought in big Chinese companies as equity partners.
Finally, US sales of coal to China are pretty minor, bringing in $1.8 billion last year. But China is the US’s second-biggest customer, and tariffs will not help Mr Trump’s already hollow promises of reviving US mining.
Peter Navarro, Mr Trump’s trade adviser and a known tariff advocate and China hawk, said his boss would speak to Mr Xi, raising hopes of an early resolution.
In January 2020, the two nations signed an initial trade deal promising China would buy an extra $200 billion of US goods over two years. None of this ever happened, and probably wouldn’t have even if the Covid pandemic had not intervened. Any cosmetic arrangement reached now will suffer the same fate.
If there is to be a trade war, neither country is entering it in a very favourable position. The Chinese economy has slowed, cutting the rate of growth of its energy imports and making the bilateral deficit with the US even less resolvable. It needs its cleantech manufacturing sector to keep growing exports. However, it can devalue to stay competitive even in the face of some tariffs.
The US, meanwhile, has kicked off by alienating allies. The Mexican and Canadian economies together are about 15 per cent the size of the US. Their tight integration into the North American economic bloc − especially of energy, minerals and vehicle manufacturing − is crucial to building the scale and efficient supply chains needed to compete with the Chinese juggernaut.
Now they are inevitably going to hedge their bets and seek trade partners elsewhere. That would lower their bilateral deficits with the US, a meaningless measure but one psychologically important for the transactional Mr Trump. And they need alternatives, to reduce their vulnerability to the next round of pressure, and absorb the impact.
Europe is next on the White House’s hit list, and a more formidable trade opponent than Canada or Mexico. On January 20, Mr Trump demanded the bloc buy more American oil and gas. It may do in the short term, as remaining Russian purchases dwindle and tariffs divert US LNG from China. But Brussels wants to phase out fossil fuels, and now it has even more reason not to be dependent on either its big eastern or western neighbours. If US LNG suddenly looks unreliable, that raises the risk that Germany or others blunder into the calamitous error of dealing with Moscow to revive Russia’s gas exports.
The latest tariffs, both those from the US and China, don’t threaten any dramatic energy supply disruptions or price spikes. But from a world that was extremely free in energy trade up to the global financial crisis, they add to fragmentation and friction. Prices will be higher, innovation less, decarbonisation slower, and a Xi-Trump handshake won’t change that reality.
Robin M Mills is chief executive of Qamar Energy, and author of The Myth of the Oil Crisis
Ten tax points to be aware of in 2026
1. Domestic VAT refund amendments: request your refund within five years
If a business does not apply for the refund on time, they lose their credit.
2. E-invoicing in the UAE
Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption.
3. More tax audits
Tax authorities are increasingly using data already available across multiple filings to identify audit risks.
4. More beneficial VAT and excise tax penalty regime
Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.
5. Greater emphasis on statutory audit
There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.
6. Further transfer pricing enforcement
Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes.
7. Limited time periods for audits
Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion.
8. Pillar 2 implementation
Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.
9. Reduced compliance obligations for imported goods and services
Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations.
10. Substance and CbC reporting focus
Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity.
Contributed by Thomas Vanhee and Hend Rashwan, Aurifer
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
Global Fungi Facts
• Scientists estimate there could be as many as 3 million fungal species globally
• Only about 160,000 have been officially described leaving around 90% undiscovered
• Fungi account for roughly 90% of Earth's unknown biodiversity
• Forest fungi help tackle climate change, absorbing up to 36% of global fossil fuel emissions annually and storing around 5 billion tonnes of carbon in the planet's topsoil
TCL INFO
Teams:
Punjabi Legends Owners: Inzamam-ul-Haq and Intizar-ul-Haq; Key player: Misbah-ul-Haq
Pakhtoons Owners: Habib Khan and Tajuddin Khan; Key player: Shahid Afridi
Maratha Arabians Owners: Sohail Khan, Ali Tumbi, Parvez Khan; Key player: Virender Sehwag
Bangla Tigers Owners: Shirajuddin Alam, Yasin Choudhary, Neelesh Bhatnager, Anis and Rizwan Sajan; Key player: TBC
Colombo Lions Owners: Sri Lanka Cricket; Key player: TBC
Kerala Kings Owners: Hussain Adam Ali and Shafi Ul Mulk; Key player: Eoin Morgan
Venue Sharjah Cricket Stadium
Format 10 overs per side, matches last for 90 minutes
When December 14-17
Closing the loophole on sugary drinks
As The National reported last year, non-fizzy sugared drinks were not covered when the original tax was introduced in 2017. Sports drinks sold in supermarkets were found to contain, on average, 20 grams of sugar per 500ml bottle.
The non-fizzy drink AriZona Iced Tea contains 65 grams of sugar – about 16 teaspoons – per 680ml can. The average can costs about Dh6, which would rise to Dh9.
Drinks such as Starbucks Bottled Mocha Frappuccino contain 31g of sugar in 270ml, while Nescafe Mocha in a can contains 15.6g of sugar in a 240ml can.
Flavoured water, long-life fruit juice concentrates, pre-packaged sweetened coffee drinks fall under the ‘sweetened drink’ category
Not taxed:
Freshly squeezed fruit juices, ground coffee beans, tea leaves and pre-prepared flavoured milkshakes do not come under the ‘sweetened drink’ band.
Mobile phone packages comparison
Essentials
The flights
Etihad (etihad.ae) and flydubai (flydubai.com) fly direct to Baku three times a week from Dh1,250 return, including taxes.
The stay
A seven-night “Fundamental Detox” programme at the Chenot Palace (chenotpalace.com/en) costs from €3,000 (Dh13,197) per person, including taxes, accommodation, 3 medical consultations, 2 nutritional consultations, a detox diet, a body composition analysis, a bio-energetic check-up, four Chenot bio-energetic treatments, six Chenot energetic massages, six hydro-aromatherapy treatments, six phyto-mud treatments, six hydro-jet treatments and access to the gym, indoor pool, sauna and steam room. Additional tests and treatments cost extra.
Profile of Tarabut Gateway
Founder: Abdulla Almoayed
Based: UAE
Founded: 2017
Number of employees: 35
Sector: FinTech
Raised: $13 million
Backers: Berlin-based venture capital company Target Global, Kingsway, CE Ventures, Entrée Capital, Zamil Investment Group, Global Ventures, Almoayed Technologies and Mad’a Investment.
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
Why it pays to compare
A comparison of sending Dh20,000 from the UAE using two different routes at the same time - the first direct from a UAE bank to a bank in Germany, and the second from the same UAE bank via an online platform to Germany - found key differences in cost and speed. The transfers were both initiated on January 30.
Route 1: bank transfer
The UAE bank charged Dh152.25 for the Dh20,000 transfer. On top of that, their exchange rate margin added a difference of around Dh415, compared with the mid-market rate.
Total cost: Dh567.25 - around 2.9 per cent of the total amount
Total received: €4,670.30
Route 2: online platform
The UAE bank’s charge for sending Dh20,000 to a UK dirham-denominated account was Dh2.10. The exchange rate margin cost was Dh60, plus a Dh12 fee.
Total cost: Dh74.10, around 0.4 per cent of the transaction
Total received: €4,756
The UAE bank transfer was far quicker – around two to three working days, while the online platform took around four to five days, but was considerably cheaper. In the online platform transfer, the funds were also exposed to currency risk during the period it took for them to arrive.
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Sholto Byrnes on Myanmar politics
