Trump’s Tariff Pause: What Retail Investors Should Know About the Muslim World’s Economic Outlook

Written by Haider Saleem
Financial and Political Analyst | LinkedIn / X

Date: April 14, 2025

Introduction

In April 2025, US President Donald Trump introduced sweeping new tariffs, with rates varying wildly between countries, and then abruptly announced a 90-day “pause” on higher duties for 57 U.S. trading partners.

For global retail investors, especially those focused on Shariah-compliant markets, understanding these shifts is critical. 

This article breaks down where the challenges — and potential opportunities — lie.

What’s the Latest With Tariffs?

• China now faces a 145% tariff, following tit-for-tat escalations.
• 57 U.S. trading partners — including the EU, Japan, and South Korea — were granted a 90-day pause and now face a flat 10% tariff.
• Canada and Mexico must comply with “rules of origin” to avoid a 25% tariff on metals and vehicles.
• Critical sectors like copper, lumber, semiconductors, and pharmaceuticals are still under review and may face sector-specific hikes
• Tech carve-out: Smartphones, computers, and chips are temporarily exempt — a major win for big tech.

This backdrop creates volatility, and for investors, that means both risk and rare opportunity.

Understanding Trump’s Tariff System

Trump’s tariff regime is ‘reciprocal’ in nature: the higher a country’s trade surplus with the U.S., the higher the tariff it is likely to face.

The system aims to ‘restore fairness’ in trade, but in practice, it’s added complexity and unpredictability.

Muslim-majority nations are navigating a patchwork of new tariffs, with exceptions in key sectors such as automotive, textiles, and electronics. 

A key factor here is origin rules – some face higher surcharges tied due to these rules — particularly in autos and metals.

Economic Implications for Major Muslim Economies

Asia: From Pressure in Pakistan to Opportunity in China’s Trade Fallout

The ripple effects of President Trump’s tariff policy are most visible in Asia — home to some of the world’s most export-reliant Muslim economies and the primary target of Trump’s ire: China.

China: From Target to Opportunity?

China now faces a total 145% tariff burden on exports to the United States, following retaliatory hikes from both sides — with Beijing’s latest counterstrike reaching 125%. While this tariff war has all but frozen US-China trade in many sectors, it’s created knock-on effects across Asia.

China is using this disruption to accelerate its long-term strategy of economic diversification and regional outreach. It’s doubling down on trade relationships across Southeast Asia and the Middle East. Senior Chinese officials have begun visiting ASEAN capitals and European hubs, pitching China as a stable, rules-based alternative to Trump’s volatility.

Interestingly, the White House recently exempted smartphones, computers, and some critical tech components from the tariff list — a move interpreted as a partial retreat to protect US consumers and tech stocks. But these carve-outs only reinforce how central China remains to global supply chains, even amid attempts at economic decoupling.

Retail Investor Angle: China’s export pivot to Asia and the Middle East could see increased regional integration. Retail investors might consider how this affects logistics, cross-border e-commerce, and ASEAN-China ETFs. US-China tension may also drive new listings or expansion from Chinese tech firms into more “neutral” capital markets.

Pakistan: Reorienting Toward Europe?

Pakistan was hit with a 29% tariff, a blow largely aimed at its textile sector — which makes up nearly 60% of its exports. 

However, recent diplomatic engagement with the US around critical minerals suggests that Islamabad is seeking ways to rebalance the economic relationship.

At the same time, Pakistan may lean more heavily on the EU’s GSP+ trade scheme, which offers tariff-free access to Europe for many Pakistani goods. With global buyers seeking alternatives to China and India, this presents a window of opportunity for Pakistan’s value-added exporters.

Retail Investor Angle: Investors focused on Pakistan should look at EU-oriented exporters, and critical minerals firms. The textile sector may see short-term hits, but longer-term retooling, especially if EU trade expands.

Indonesia: Turning Away from the West?

Indonesia faces tariffs up to 32% on seafood, textiles, footwear, and electronics. While these tariffs could slow growth, Indonesian policymakers are viewing the moment as a pivot point — redirecting trade ambitions toward the Gulf Cooperation Council (GCC).

Indonesia is negotiating a Comprehensive Economic Partnership Agreement (CEPA) with the GCC, targeting halal products, Islamic finance, and digital infrastructure. If successful, this could insulate parts of its economy from future shocks tied to Western demand.

Retail Investor Angle: Investors might explore Indonesia’s Islamic fintech, agriculture, and Gulf-linked infrastructure sectors. ETFs with exposure to Indonesia-GCC trade corridors may offer a future-forward bet on decoupling from Western supply chains.

Turkey: Between Pressure and Possibility

Despite initial optimism, new revelations show Turkey’s automotive sector will face tariffs up to 50% on some car exports and components. This is a significant leap from previous rates of 2%–25%.

Yet Turkish officials argue that the disruption may ultimately benefit Turkey by levelling the global playing field. Turkey already exports over $35 billion in autos annually and is deeply embedded in EU-linked trade networks.

President Erdogan has positioned Turkey as a stabilizing bridge between Europe, Syria, and the fractured global trade system.

Retail Investor Angle: The long-term view on Turkey’s manufacturing and transport sectors remains strong. Automotive equities may face short-term pressure, but infrastructure and defense-linked industries could prove resilient.

Middle East: Resilient, Yet Not Immune

Saudi Arabia & the Gulf
GCC nations mostly face the baseline 10% tariff, reflecting their relatively balanced trade with the U.S.

But falling oil prices — partially triggered by the broader trade war — are straining budgets.

The Gulf may gain from ‘friendshoring’ and ‘nearshoring’ trends, with some U.S. companies potentially shifting supply chains to places like Saudi Arabia or the UAE.

Retail Investor Angle: Keep an eye on Gulf-based ETFs or sovereign wealth fund activity. Sectors like renewable energy, logistics, and advanced manufacturing could see a funding boom.

Africa: Caught in the Crossfire

North African nations like Egypt, Morocco, and Algeria have seen tariffs ranging from 15%-30%. Many rely heavily on food and energy imports, leaving them vulnerable to inflationary spikes and FX pressure.

Retail Investor Angle: The region remains volatile. But Moroccan solar, Egyptian fintech, and pan-African logistics companies with diversified revenue streams could become attractive if global investors begin seeking non-aligned growth hubs

Conclusion – Strategic Considerations for Investors

Trump’s 90-day pause is just that — a pause, not a pivot. Muslim-majority countries are already reacting by forming new alliances, recalibrating exports, and rethinking their economic dependencies.

Here are six things every retail investor should be thinking about:

1. A key factor here is origin rules – understand them and act accordingly. Things may not be as bad as they first seem
2. Diversify Regionally – Don’t assume Western markets are the only source of growth. Southeast Asia, Turkey, and the Gulf are repositioning quickly.
3. Watch Trade Blocs – Pakistan-EU (GSP+), Indonesia-GCC (CEPA), and Turkey-EU dynamics are key to assessing medium-term opportunity.
4. Understand Sectoral Exposure – Textiles, autos, and tech hardware are vulnerable. Minerals, logistics, and Islamic fintech may gain ground.
5. Expect Currency Volatility – As tariffs strain FX reserves, local currencies may depreciate. Hedge where possible.
6. Look Beyond the Pause – Once the 90-day window ends, countries without trade deals may face the full force of Trump’s tariffs.

Now may be the right time to look beyond the headlines — because in chaos, there is often value.

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