US Trade and Investment Policy Shifts: What MENA Businesses Should Prepare For in 2026

Tariff expansion, broader export controls and new outbound investment restrictions are changing the operating assumptions for exporters, investors and sovereign capital across the Middle East and North Africa.

Executive Summary

US trade and investment policy moved through 2025 in a markedly more transactional direction, according to a year-end analysis published by Morgan Lewis. The shift — built largely on executive action rather than legislation — spans tariff expansion, wider export controls, recalibrated sanctions programmes and new restrictions on outbound investment.

For MENA economies, the operational consequences are indirect but material. They shape the cost of reaching the US market, the design of supply chains routed through Gulf logistics and free-zone hubs, the compliance burden on regional groups with US technology exposure, and the diligence frameworks sovereign and private investors apply to cross-border transactions.

The practical message for 2026 is that adaptation, not anticipation, is the realistic planning posture. Several decisions — including the US Supreme Court ruling on emergency tariff authority, pending Section 232 investigations and the July 2026 USMCA joint review — will reset parameters that regional exporters and investors cannot influence but must be positioned to absorb.

Introduction

The reference analysis frames the current period as a structural break rather than a cyclical adjustment. The US administration entered its term with clearer objectives and a more expansive agenda than in 2017, favouring leverage and domestic economic outcomes over multilateral engagement. Tariff increases exceeded earlier market expectations in both scale and scope, particularly for China, though postponements and exemptions muted part of the immediate effect.

That framing matters for MENA. The region's economies are deeply tied to global trade architecture as exporters of energy and petrochemicals, importers of technology and capital goods, operators of transhipment and re-export infrastructure, and increasingly as sources of outbound capital. When the world's largest economy changes how it uses trade instruments, the effects arrive in MENA through pricing, logistics routing, licensing timelines and investment screening — not necessarily through direct bilateral confrontation.

Main Analysis

A policy environment built on executive authority

The reference notes a heavy reliance on executive orders and emergency authorities to implement tariffs, sanctions and investment controls, with a willingness to test the limits of that authority in litigation, up to the Supreme Court. The result is a diminished role for the legislature and greater legal and operational uncertainty for businesses that plan around published policy timetables.

For multinationals operating in MENA, this changes the forecasting problem. Policy risk is no longer concentrated around legislative calendars; it is continuous and can be revised through administrative action. Companies with dual exposure — US market access on one side, US-origin technology and financial infrastructure on the other — face a narrower window between policy announcement and commercial consequence.

Tariffs as an instrument of leverage

The analysis describes tariffs as a tool serving both economic leverage and national security objectives, affecting a wide range of goods and industries, with bilateral negotiations producing tariff variability by region and product. Importers are being pushed to scrutinise classification, valuation, country of origin and trade-agreement eligibility with greater precision.

For MENA exporters of metals, petrochemicals, manufactured goods and processed food, the practical implication is that tariff exposure is now a pricing and contracting variable rather than a fixed cost assumption. The reference also highlights that importers should prepare for potential refund scenarios if litigation outcomes or negotiations alter duty obligations retroactively — a consideration relevant to any regional supplier that has absorbed tariff costs into long-term offtake agreements.

Export controls and the widening compliance perimeter

Export controls are increasingly used as an economic policy instrument alongside their traditional security function, with expanded restrictions targeting semiconductors, artificial intelligence and other sensitive technologies, and a broadening of the Entity List to cover affiliates of listed entities. The Affiliates Rule is suspended for one year under a bilateral economic agreement with China, but the reference advises companies to use the suspension period to prepare for expanded compliance requirements and documentation expectations.

Regional relevance here is significant. Gulf ambitions in semiconductors, AI infrastructure, cloud capacity and advanced manufacturing depend on access to US-origin components, software and design tools. Companies in these sectors may find that licensing backlogs, staffing constraints and slower agency processing — issues the reference identifies as already acute — extend project timelines in ways that frustrate delivery commitments to governments and anchor tenants.

Sanctions recalibration and the Syria opening

The reference records the termination of the Syria and West Bank sanctions programmes, alongside heightened focus on Iran, North Korea, Venezuela and Russia, and new designations on two major Russian oil and gas companies late in the year. The termination of the Syria programme is the development with the most direct MENA implications, opening a policy path toward reconstruction financing, trade re-engagement and project development that had previously been legally constrained for international banks and contractors.

At the same time, enforcement priorities centred on trade and customs fraud and sanctions violations imply that the compliance perimeter around regional trading and financial flows remains tight. Banks, insurers and logistics operators in the Gulf are likely to remain the primary gatekeepers of documentation quality.

Outbound investment rules and capital direction

The analysis points to sharper scrutiny of outbound investment flows into sensitive technology sectors in China, with notification obligations and, in some areas, prohibitions. This is reinforced by Foreign Entity of Concern provisions under the Inflation Reduction Act affecting tax credit eligibility for renewable energy components with certain Chinese ties, and by provisions in the recent National Defense Authorization Act addressing outbound investment and the procurement of biopharmaceutical inputs from countries of concern.

MENA sovereign wealth funds and family offices have expanded into technology, clean energy and life sciences as co-investors alongside US and European institutions. Where a regional co-investor sits in a fund structure with exposure to restricted sectors, diligence and structuring requirements are likely to rise.

Regional Impact

Trade and supply chain resilience. Regional transhipment hubs, free zones and re-export corridors derive part of their value from tariff differentials and origin rules. Where US tariff variability increases by product and partner, origin planning and documentation become a competitive service offering for Gulf logistics operators — and a compliance exposure for those who treat them as administrative formalities.

Industrial transformation and competitiveness. Gulf industrial strategies focused on downstream metals, chemicals and advanced manufacturing depend on access to export markets and imported inputs. Tariff and export-control volatility affects both ends of that equation, though it also strengthens the case for regional content, local processing capacity and supplier diversification within MENA.

Foreign direct investment and capital allocation. Policy uncertainty in the US market does not automatically redirect capital to MENA, but it does raise the relative value of jurisdictions offering predictable treatment of foreign investors, stable regulatory timelines and functioning dispute resolution. Regional investment promotion agencies have a narrow window to translate that into mandate wins.

Innovation ecosystems and private sector development. Technology startups and scaleups in the region that build on US-origin cloud, semiconductor and software stacks face licensing and compliance friction as a design constraint, not an afterthought. This may accelerate interest in sovereign-backed technology stacks and regional data infrastructure, though substitution remains partial in most advanced categories.

Policy and regional integration. To the extent US policy becomes more bilateral and transactional, MENA governments may find greater value in intraregional trade facilitation, customs modernisation and harmonised standards as hedges against external volatility.

Strategic Implications

For executives. Trade policy planning should be integrated with procurement, pricing, capital investment and manufacturing location decisions rather than treated as a legal compliance function. Contract design matters: force majeure, change-in-law, tariff pass-through and termination provisions merit review where US market exposure is material.

For investors. Monitoring signals include the Supreme Court ruling on emergency tariff authority expected in early 2026, the trajectory of Section 232 investigations in critical industries, and the USMCA joint review scheduled for July 2026. Each has the potential to alter duty structures, refund entitlements and the durability of supply chain arrangements that underpin valuations in logistics, industrials and energy transition assets.

For policymakers. The reference's central observation — that trade, sanctions and investment tools are now used simultaneously and routinely — suggests that MENA governments may need faster internal coordination between trade, finance and investment authorities to protect national treatment standards and to support domestic firms facing extraterritorial compliance demands.

Competitive risks and opportunities. Compliance capacity is becoming a source of differentiation. Firms able to demonstrate robust counterparty screening, documented origin analysis and disciplined licensing processes will be better positioned to win mandates from multinational partners reducing their own risk exposure. Conversely, opacity in beneficial ownership or sector exposure remains a live barrier to institutional capital.

Future Outlook: 2026–2030

Over the next three to five years, three trajectories appear most consequential for the region.

First, tariff structures are likely to remain administratively driven and subject to reversal through litigation or negotiation, which argues for scenario-based planning rather than single-path investment cases in export-oriented manufacturing.

Second, export controls and investment screening in sensitive technologies are likely to broaden rather than narrow. For MENA, this implies a longer horizon for building indigenous capability in semiconductors, AI and advanced biopharmaceuticals, and continued reliance on structured partnerships and licensed access in the interim.

Third, sanctions architecture is likely to keep moving in both directions. The termination of the Syria programme creates a reconstruction and trade normalisation pathway that could absorb significant regional capital over time, while pressure on Iran and Russia keeps compliance risk elevated for traders, banks and shipping lines.

Underneath these trajectories, the more durable trend is the growing premium on regulatory agility. Jurisdictions and companies that can re-document, re-route and re-contract quickly will capture share from those that cannot.

Conclusion

The 2025 policy record described by Morgan Lewis is not a temporary disruption. It reflects a settled preference for using trade, technology and investment instruments to pursue national objectives, with implementation routed through executive action and tested through litigation. MENA businesses cannot set these parameters, but they can reduce the cost of operating inside them.

The priorities for 2026 are unglamorous and operational: stronger origin and classification discipline, contract flexibility, licensing readiness, and trade intelligence embedded in commercial decision-making. In an environment where policy can shift materially within a single administrative cycle, execution quality becomes a form of strategic advantage.

Key Takeaways

• US trade and investment policy is now primarily executive-driven, producing continuous rather than calendar-based policy risk for cross-border businesses.
• Tariff expansion and bilateral negotiations create product- and region-specific variability, raising the importance of classification, valuation and origin discipline for MENA exporters.
• The one-year suspension of the Affiliates Rule under the Entity List expansion is a preparation window, not a reprieve, for technology-exposed regional groups.
• Sanctions recalibration — notably the termination of the Syria programme — creates selective re-engagement opportunities alongside continued enforcement pressure on Iran and Russia-related activity.
• Outbound investment controls and Foreign Entity of Concern provisions affect the structuring and diligence of MENA capital deployed into technology, clean energy and life sciences.
• Key 2026 markers: the US Supreme Court ruling on emergency tariff authority, Section 232 investigations, and the July 2026 USMCA joint review.

SEO Keywords

MENA economy, Middle East business, North Africa economy, MENA investment, foreign direct investment, economic diversification, cross-border trade, regional business, infrastructure investment, industrial development, digital economy, capital markets, sovereign wealth funds, startup ecosystem, market intelligence, policy and regulation, strategic investment, supply chain resilience, business intelligence, regional competitiveness, export controls, tariffs, sanctions compliance, outbound investment, USMCA, Section 232, IEEPA.

Sources

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