US Trade and Investment Shifts in 2025: Strategic Implications for MENA Business

Executive Summary

The rapid evolution of US international trade and investment policy throughout 2025 has created a more complex and unpredictable operating environment for global businesses. Tariffs, export controls, sanctions, and outbound investment restrictions have been deployed aggressively, with significant consequences for cross-border trade and investment flows. For companies in the Middle East and North Africa (MENA) region, these shifts carry strategic implications that extend well beyond US market access. This analysis examines the key policy developments, their relevance to MENA economies, and the strategic considerations for businesses, investors, and policymakers seeking to navigate the 2026 landscape.

Introduction

Over the past year, US trade policy has undergone fundamental changes. Market participants have witnessed an unprecedented reliance on executive action to impose tariffs, expand export controls, and recalibrate sanctions. The administration has signaled a more transactional and national-security-driven approach to international economic engagement, departing from traditional multilateral frameworks. Businesses worldwide, including those in MENA, now face heightened uncertainty and must integrate geopolitical and trade risk into core strategic planning.

This article synthesizes major developments from 2025, based on the analysis published by Morgan Lewis, and interprets their regional impact for MENA-based corporations, institutional investors, and government entities.

Main Analysis

Trade and Investment Policy: Structural Shifts

The current US administration entered office with a more focused and expansive policy agenda than previous terms. Rather than multilateral coordination, the emphasis has shifted to maximizing US leverage through “hard power” trade tools. Tariffs have become the primary instrument, with the administration imposing significant increases on Chinese goods—in some categories reaching levels beyond market expectations. However, many of these increases were postponed or exempted, creating a patchwork of timelines that complicates corporate planning.

Governance by executive order has diminished the role of Congress, and many measures are being contested in courts, including the use of the International Emergency Economic Powers Act (IEEPA) to impose tariffs. This creates legal uncertainty and potential refund scenarios.

For multinational corporations, the ongoing policy volatility has led to:

• Renewed focus on supply contract flexibility and scenario analysis
• Adjustments to pricing models and sourcing strategies
• Increased scrutiny of disclosure obligations related to tariff exposure
• Greater integration of trade policy forecasting into capital allocation decisions

Export Controls, Sanctions, and National Security Reviews

Export controls have expanded beyond traditional national security concerns to serve economic policy goals. Key developments include:

• Broader restrictions on semiconductors, artificial intelligence, and related technologies, including “China-related supply chains.”
• Extension of the Entity List to include affiliates of listed entities—a measure suspended for one year under a bilateral agreement with China, but with clear intent to resume.
• Expanded due diligence requirements as regulators target trade and customs fraud, sanctions evasion, and drug cartel-related financial activity.

Sanctions programs saw notable shifts:

• The termination of Syria and West Bank sanctions programs, signaling policy realignment.
• Increased focus on Iran, North Korea, Venezuela, and Russia.
• Sanctions announced against two major Russian oil and gas companies to pressure peace negotiations over Ukraine.

In the investment realm, new outbound investment restrictions target US capital into Chinese technology sectors, with notification and prohibition requirements. These rules interact with existing “Foreign Entity of Concern” provisions under the Inflation Reduction Act, which restrict tax credits for clean energy components with Chinese ties. The National Defense Authorization Act also addressed outbound investment in biopharmaceutical inputs from countries of concern.

Operationally, businesses face a significant backlog in export classification and licensing applications, exacerbated by staffing reductions and government shutdowns. This delays processing and increases timeline risk, compelling companies to build greater buffer into commercial plans.

Tariffs and Trade Remedies: New Structures, Higher Rates, Litigation Risk

Tariff activity accelerated in 2025, affecting a broad array of goods. Key measures included additional tariffs on Chinese imports, industry-specific tariffs on semiconductors and pharmaceuticals, and investigations under Section 232 of the Trade Expansion Act. Companies have had to reassess classification, valuation, and country-of-origin compliance.

Litigation challenging IEEPA-based tariffs reached the Supreme Court, with a decision expected in early 2026. This case could determine the future scope of presidential tariff authority and potentially lead to retrospective refunds for importers. Meanwhile, the first joint review of the US-Mexico-Canada Agreement (USMCA) in July 2026 may open renegotiation risks.

Regional Impact

For the MENA region, these policy shifts create both challenges and opportunities.

• Export Controls and Technology Access: Cross-border restrictions on semiconductors and AI could limit transfer of advanced technologies to MENA customers, affecting industrial modernization and digital economy ambitions. Governments and enterprises may need to seek alternative suppliers or develop domestic capabilities.
• Sanctions Complexity: The termination of some sanctions programs alongside heightened focus on Iran and other states creates a fragmented compliance landscape. Gulf-based financial institutions and trading companies must carefully screen counterparties, especially in Iran-linked trade.
• Investment Restrictions: US limits on Chinese outbound investment could indirectly affect Chinese investment flows into MENA infrastructure and technology projects, potentially slowing capital deployment in certain sectors.
• Supply Chain Realignment: As US tariffs raise the cost of Chinese imports, some multinationals are advanced manufacturing. This could benefit MENA countries with strong logistics, energy resources, and investment incentives, such as Saudi Arabia, the UAE, and Egypt.
• Oil and Gas Dynamics: Sanctions on Russian energy companies could impact global energy supply chains, influencing strategic partnerships in the MENA energy sector.

Strategic Implications

For business leaders across MENA, the following considerations are critical:

• Compliance and Risk Management: Corporate legal and compliance teams must invest in real-time policy tracking and scenario planning. Supply chain audits and counterparty screening should account for US secondary sanctions and export control “affiliates” rules.
• Investment Strategy: Institutional investors should assess portfolio exposure to US-MENA trade dependencies and consider hedging against policy volatility. The potential for tariff refunds may create litigation-driven opportunities.
• Policy Engagement: MENA governments should proactively engage with US policymakers on trade frameworks, leveraging bilateral relationships to secure stable market access for diversified industries.
• Technology Partnerships: To mitigate the impact of export controls, MENA firms should identify alternative technology providers in East Asia or Europe, while advancing domestic R&D in critical sectors.
• Contractual Flexibility: Commercial contracts should include robust force majeure, price adjustment, and compliance repudiation clauses to adapt to sudden regulatory changes.

Future Outlook

Looking ahead to 2026, several factors will shape the evolving trade landscape:

• Supreme Court Ruling on IEEPA Tariffs: The decision could redefine executive trade powers, potentially rolling back some tariffs or triggering refunds. Importers should file protective claims.
• USMCA Review: The 2026 joint review could introduce new uncertainties for North American trade, but may also strengthen nearshoring trends beneficial to MENA as a stop on global supply chains.
• Expansion of Export Controls: Expect broader entity listings and tightened rules for emerging technologies, requiring continuous adaptation.
• MENA’s Strategic Position: Amid US-China decoupling, MENA can position itself as a neutral trade hub, attracting relocating production and investment. The region’s energy wealth and infrastructure projects offer leverage in negotiating favorable terms.
• Compliance Tech: Investment in trade compliance technology will become a competitive differentiator, enabling companies to manage documentation and audits efficiently.

Conclusion

The US trade and investment policy environment in 2025 has reset the global business landscape. For MENA stakeholders, the lessons are clear: resilience requires strategic foresight, flexible operating models, and deep integration of trade intelligence into corporate governance. Those who adapt swiftly will not only mitigate risks but also capture new opportunities emerging from the global realignment.

Key Takeaways

• US trade policy under the current administration is more transactional and executive-driven, with tariffs as a core tool.
• Export controls and sanctions are broadening in scope, directly affecting technology and energy sectors relevant to MENA.
• Supreme Court rulings and USMCA review in 2026 will introduce further legal and commercial uncertainty.
• MENA has an opportunity to emerge as a neutral supply chain and investment hub, provided regulators and firms act proactively.
• Businesses must embed trade policy tracking into procurement, pricing, and investment decision-making.

Sources

• Based on: Morgan Lewis, “US International Trade and Investment: Key Shifts in 2025 and What Businesses Should Know for 2026” (URL: https://www.morganlewis.com/pubs/2026/01/us-international-trade-and-investment-key-shifts-in-2025-and-what-businesses-should-know-for-2026)