UAE Exchanges, Fintechs Brace For Trump Tariffs Impact On Remittances As Global Trade Tensions Mount

However, industry experts say it’s too early to determine the full impact on the nearly $40 billion that expatriates send annually from the Emirates.

In the UAE, remittance outflows have shown a declining trend over recent years. In 2023, outward remittances totaled $38.5 billion, marking a continued decline from the peak of $52.88 billion in 2019. Specific data for UAE remittance outflows in 2024 are not yet available.

Money transfer providers in Dubai are closely monitoring customer behaviour while adapting their services to handle potential currency volatility as Trump’s trade policies threaten to upend global trade patterns and currency values in key remittance-receiving nations like India, Pakistan and the Philippines.

Hasan Fardan Al Fardan, CEO of Al Fardan Exchange, one of the UAE’s leading money transfer companies, told Arabian Business that early indicators suggest some businesses are adjusting their transfer timing, though individual remittance patterns remain largely stable.

“We have observed some front loading for corporate payments happening before the actual tariffs comes into effect. However, it is still too early to point out any significant impact just yet,” Al Fardan said. “To gain a clearer understanding, we’ll need to observe the salary and month-end cycles, as this will give a better picture of whether individuals are front-loading transfers in anticipation of potential FX shocks, or if they are holding back due to uncertainty.”

Al Fardan expressed confidence that the UAE’s economic strength provides a buffer against potential volatility.

“The UAE economy is strong and is expected to grow by 5.1 per cent in 2025,” he said. “This robust growth, supported by key sectors like tourism, construction, and financial services, provides confidence and stability for both residents and remitters in the region.”

UAE expat remittance commitment remains strong

Despite potential headwinds from global policy shifts, Al Fardan said that expatriate workers in the UAE maintain a strong commitment to supporting families in their home countries.

“While currency fluctuations can sometimes create challenges, remitters from the UAE to countries like India, Pakistan, the Philippines, and Egypt remain committed to supporting their families back home,” he said. “Despite potential market shifts, the desire to send money to loved ones is unwavering.”

He noted that the fundamental purpose of remittances goes beyond market conditions.

“For millions, it’s not just a transaction, it’s a way to support families, pay for education, cover medical costs, and build futures back home,” Al Fardan said. “That’s why the industry’s focus must remain on providing secure, reliable, and accessible services, regardless of market shifts.”

Mohammad El Saadi, Vice President of Dubai-based Careem Pay, pointed out that the connection between the UAE dirham and U.S. dollar creates a direct channel through which U.S. trade policies could affect remittance dynamics in the Emirates.

“Since the AED is pegged to the USD, any dollar strength – especially tied to U.S. trade policies – can influence the value of what’s sent home,” El Saadi said.

He explained that Careem Pay serves diverse users in the UAE, including gig economy workers who regularly transfer money to countries like India, Pakistan, and the Philippines.

“A new round of U.S. tariffs will likely lead to noticeable shifts in remittances,” he told Arabian Business. “A weaker U.S. dollar means senders will need to remit more AED to maintain the same value back home, pushing them to seek better exchange rates and lower fees.”

El Saadi noted some factors that could influence remittance behaviors in changing economic conditions. “Reduced investor appetite in unstable markets may also curb investment-driven remittances, especially in corridors where funds are sent for real estate or business purposes.”

He added that economic pressures could create conflicting trends.

“Rising living costs could either limit how much people can remit or increase the need for support back home. The direction of the shift will depend on how these opposing forces balance out,” he said.

El Saadi also highlighted how his platform’s speed provides an advantage during market volatility. “With Careem Pay, transfers average just seven minutes and often go through in seconds, giving users the flexibility to move quickly when it matters most.”

Trump’s tariff rollercoaster

The tariffs, which Trump initially described as a “declaration of economic independence,” included a 10 per cent baseline duty on all imports and additional “reciprocal” tariffs ranging from 20 to 49 per cent on countries with which the United States has significant trade deficits.

On Wednesday, Trump announced a pause on the hefty duties he had imposed on dozens of countries less than 24 hours after they took effect. The move came following the most intense episode of financial market volatility since the early days of the COVID-19 pandemic, which erased trillions of dollars from stock markets.

Despite the partial reversal, Trump kept the pressure on China, hiking tariffs on Chinese imports to 125 per cent from the 104 per cent level that kicked in on Wednesday. The 10 per cent blanket duty on almost all U.S. imports will also remain in effect, the White House said.

U.S. Treasury Secretary Scott Bessent asserted that the pullback had been the plan all along to bring countries to the bargaining table, though Trump later indicated that market turmoil had factored into his thinking.

Global implications for remittance industry

Financial technology companies specialising in remittances are bracing for increased currency volatility and regulatory complexities that could ultimately push up costs for users.

As of 2024, global remittance flows to low- and middle-income countries are projected to reach approximately $685 billion, surpassing the combined total of foreign direct investment and official development assistance. This represents a 2.3 per cent increase from the previous year, highlighting the continued significance of remittances as a vital source of external finance for developing nations.

Regionally, remittance flows exhibit varying trends. For instance, remittances to South Asia were expected to grow by 5 per cent in 2024 to reach $198 billion, driven by strong inflows to countries like India and Pakistan. In contrast, remittance flows to Europe and Central Asia were projected to decline by 1.2 per cent during the same period, though specific 2024 data is not yet available.

Dima Kats, CEO and Founder of Clear Junction, warned that protectionist policies could lead to greater complexity in cross-border payments regulations.

“Political isolationism and protectionism make the world more fragmented. And when the world fragments politically, it fragments in terms of regulations and compliance too,” Kats told Arabian Business. “That’s where it starts to directly affect payments.”

Cross-border payment providers are already responding to short-term volatility triggered by Trump’s announcement, but Kats warns of more significant long-term implications.

“Cross-border payments have always been risky and demanding of large collective effort. Now, with additional regulatory fragmentation, they’re only getting riskier,” he said. “Some providers will fail, others will walk away, and a few will invest heavily in new risk management strategies.”

Beyond the UAE, the potential impact of Trump’s tariffs on global remittance flows remains a concern for industry experts. The World Bank estimates that remittances to low- and middle-income countries totaled $669 billion in 2023, serving as a critical lifeline for millions of families in developing nations.

For the Gulf, which host millions of expatriate workers, remittance corridors represent significant financial flows. Saudi Arabia has consistently ranked among the top global sources of remittances, while the UAE has maintained stable outflows.

These figures underscore the critical role of remittances in supporting households and economies, particularly in developing regions, amidst fluctuating global economic conditions.

Despite these challenges, Kats expressed optimism about the industry’s ability to adapt. “Our job in the business community is to build solutions in the context of political developments,” he said. “Each crisis is an opportunity – and I like to think that the bigger the crisis, the bigger the opportunity.”