Kazakhstan Aims for Strategic Advantages Amidst Tough U.S. Tariff Sanctions
Trade War Shakes Up Kazakhstan, Yet Minimal Impact Anticipated
Last week, a seismic shock rippled through the global trade landscape as U.S. President Donald Trump announced an all-out trade war, imposing sweeping tariffs on almost every country - including Kazakhstan. The Kazakhstani economy, however, might weather this storm relatively unscathed, according to experts.
Kazakhstan, subjected to the highest tariff in Central Asia at 27%, may face nominal consequences as per the predictions. This sentiment is shared by Darren Spinck, a research fellow at the Henry Jackson Society, a U.K.-based think tank. He was taken aback by the 27% tariff yet emphasized that only a tiny fraction of Kazakhstan's overall trade will be impacted.
The U.S. represents just 3% of Kazakhstan's foreign trade, with around 85% of its exports to America - consisting of energy resources, oil, uranium, and silver - being exempted from the tariff, as confirmed by the Kazakh Ministry of Trade and Integration on April 3. The remaining 4.8% of Kazakhstan's total exports to the U.S. will be affected - a relatively small portion.
Undeniably, the tariffs might not change much for Kazakhstan. About 80% of its exports fall under special provisions, including products like oil, energy resources, rare earth metals, ferroalloys, and more, which are exempted from the tariff order.
Tensions between the U.S. and China are escalating, and Beijing's response to the U.S. tariffs - placing export restrictions on rare earth elements - could strain global supply chains for weapons, electronics, and consumer goods. In this context, Central Asia, particularly Kazakhstan, holds significant promise for the U.S., especially as it seeks diversification of its rare earth supplies.
A strategic dialogue between the two presidents - Kassym-Jomart Tokayev and Donald Trump - could pave the way for broader agreements that would benefit both economies. Some experts even suggest that the U.S. may consider granting Kazakhstan permanent normal trade relations, leading to increased U.S. investments in Kazakhstan and Central Asia – particularly in infrastructure, the Middle Corridor, and the mining sector.
However, closer ties with the EU may not be imminent. The EU is already Kazakhstan's largest trading partner, and the U.S. does not rank among the top ten export destinations. Despite this, a global economic slowdown as a result of increasing protectionism could indirectly impact energy-exporting nations like Kazakhstan.
As these events unfold, Kazakhstan continues to adhere to World Trade Organization principles and discusses potential tariff exemptions with the U.S. In addition, the Eurasian Development Bank (EDB) is actively monitoring the situation, highlighting the broader implications of rising protectionism on member states like Kazakhstan.
On a broader scale, the U.S.-led trade war could open doors for strategic collaborations in critical minerals, energy infrastructure expansion, nuclear and tech partnerships, trade agreement modernization, and Middle Corridor development. The future trade landscape between Kazakhstan and the U.S. remains uncertain but ripe with opportunities as tensions between major trading powers escalate.
Insights:
- Follow the U.S.-Kazakhstan trade developments, as these changes could drive strategic agreements in critical minerals, energy infrastructure, nuclear and tech partnerships, and the expansion of the Middle Corridor.
- Kazakhstan will likely continue adhering to World Trade Organization principles while negotiating potential tariff exemptions with the U.S.
- Central Asian nations could potentially attract increased U.S. investments, particularly in infrastructure, the Middle Corridor, and the mining sector, following the U.S. granting Kazakhstan permanent normal trade relations.
- The high tariffs imposed on Kazakhstan by the U.S. are expected to have a minimal impact on the country's overall trade, with only a small fraction of its exports being affected.
- The inorganic materials, such as rare earth metals and ferroalloys, that make up a significant portion of Kazakhstan's exports are exempted from the tariff order, highlighting the importance of these industries in the context of the trade war.
- Likely, the U.S.-Kazakhstan trade relations could witness a shift towards broader agreements, including potential permanent normal trade relations, strategic collaborations in critical minerals, energy infrastructure expansion, nuclear and tech partnerships, and the development of the Middle Corridor, as the United States seeks diversification of its rare earth supplies.
