Firms Scurrying to Stockpile Goods Due to US Tariffs

Dubai Islamic Bank (DIB) said that the imposition and threat of US tari­ffs have triggered significant volatility in global trade as even before came into effect, the anticipation alone prompted firms to stockpile goods, driving up warehousing and logistics costs, straining supply chains, and increasing operational expenses.

Higher expenses will likely be passed on to the final consumers as substantiated by the recent PMI data from the UAE and wider GCC, DIB said in its monthly economic bulletin for April.

On a macro level, the narrative around tari­ffs has already contributed to upward pressure on inflation as retailers may use tari­ff headlines to justify price hikes beyond actual cost increases. Domestic firms may opportunistically raise prices under the higher tariff­ rhetoric taking advantage of consumer uncertainty about which tari­ffs are active.

This dynamic can amplify inflation, especially in frequently purchased goods, eroding consumer sentiment and spending power. If consumers expect persistent price increases, their behaviour can reinforce inflationary trends.

On the other hand, the US dollar has weakened YTD amid erratic US trade policy leading to market volatility and global investors have started to seek alternative safe havens in commodities including gold & silver, DIB said.

With the stalled new US tariff­s representing the most significant disruption to global trade in decades, businesses are now looking to mitigate trade risks by re-routing supply chains to lower tari­ff markets such as the UAE and wider GCC.

Opportunity for GCC Businesses

Modern trade is deeply interconnected and many products require multiple cross-border steps, and tari­ffs can disrupt internal supply chains of multinational corporations. Outsourcing within the same company across multiple countries is common, making switching suppliers a less sel­ective strategy in many cases as global political polarisation has created distorted narratives around trade and inflation.

For the UAE and wider GCC, this is an opportunity to position themselves as reliable and stable trade partners in a fragmented global environment, DIB added.

The 90-day tari­ffs pause provides businesses a window to re-evaluate supplier contracts, renegotiate freight rates, and shift warehousing strategies. Businesses can also use the tariff­ narrative to improve margins judiciously without undermining consumer trust.

Lastly, strengthening customer engagement and explaining pricing in transparent ways can turn potential frustration into brand loyalty. The UAE and the GCC region are better positioned than ever to benefit from the US trade policy uncertainties as consumer sentiment remains stable across many GCC countries, off­ering a favourable environment for brands that prioritise transparency and value.

Retail and logistics players have proactively invested in warehousing and supply chain optimisation with many start-ups setting base in the UAE during COVID-19; and regional economic diversification initiatives across the GCC, such as the UAE industrial strategy, Saudi Vision 2030 have ensured that the Gulf economies are more resilient to economic uncertainties, DIB added.