The US raised Egypt’s tariff to 12.5% while Cairo opened its market wider to US cars

Egypt-US trade policy moved in opposite directions last week. Washington put most Egyptian goods in a higher 12.5% tariff bucket, while the Investment Ministry opened a clearer route for US-made vehicles into the local market.

Egyptian goods covered by the Section 301 investigation entering the US now face a 12.5% tariff — the higher of two rates under a new US forced-labor regime covering 60 trading partners — after President Donald Trump’s temporary 10% global import surcharge expired Friday, according to a Federal Register notice (pdf) from the US Trade Representative (USTR). The new Section 301 duty applies to Egyptian goods entered for consumption from 12:01am ET on 24 July, with a narrow carveout for goods already loaded and in transit before then and entered before 28 July. The duty replaces the expiring 150-day surcharge, lifting the broad tariff on covered Egyptian goods by 2.5 percentage points.

SOUND SMART- Section 301 of the Trade Act of 1974 gives the US President broad authority to impose tariffs on foreign goods in response to trade practices deemed unfair or actionable. The USTR has interpreted that to include insufficient enforcement of forced-labor import bans.

Egypt is in the higher-rate bucket: The US set Egypt’s rate at the higher of two tiers, reserved for economies that neither imposed a forced-labor import ban nor committed to one, while the 10% tier went to countries with a ban, a partial regime, or a reciprocal-trade commitment. The notice does not say Egyptian exports were made with forced labor. It says the investigation analyzed whether the 60 reviewed economies had the import controls needed to keep forced-labor goods out of their own markets, and that Section 301 lets Washington impose tariffs “without regard to whether or not” the goods were directly involved in the practice under investigation.

A broad tariff, unless Washington needs the product: The new duty carves out product lines where tariffs could threaten to “cause economy-wide disruption,” certain products “that cannot be grown or produced in sufficient quantities or at reasonable prices” domestically or sourced elsewhere, and raw material “that if subject to these tariffs could lead to the unavailability of domestic supply.” Reuters says oil and gas, fertilizer, certain foodstuffs, aircraft and parts, critical minerals, and goods already covered by Section 232 national-security tariffs — autos, steel, aluminum, and copper — are among the carveouts.

Egypt’s exposure is modest, but not trivial. US Census data show the US imported USD 1.4 bn of goods from Egypt in the first five months of 2026 while exporting USD 5.1 bn, leaving Washington with a USD 3.7 bn goods surplus. The bilateral numbers do not point to a US deficit story. The USTR notice frames the tariff instead as a way to “encourage the investigated economies to impose and effectively enforce a forced labor import ban” and “obtain the elimination” of the practices Washington found actionable.

REMEMBER- The old 10% tariff had given Egypt a relative advantage. We noted last year that Egypt’s lower exposure to Trump’s first tariff round could help position it as an alternative manufacturing base for companies seeking access to the US market, with Garment Export Council Chairman Fadel Marzouk saying the sector could attract around USD 2 bn in new investments. That advantage fed directly into the QIZ story, where exports reached USD 1.45 bn in 2025 and the government was targeting USD 2 bn this year. It also helped textile exporters, with Egypt’s 10% rate looking attractive against 20% or higher tariffs on some competing manufacturing bases.

The QIZ talks matter more now: QIZ exports had been one of Egypt’s clearest openings under the earlier tariff regime, with the government’s efforts to expand participation in the framework and open talks to reduce the Israeli component requirement — currently 10.5% — to a 5-8% sliding scale. Those talks appear to still be moving, with AmCham Egypt Chairman Amr Mehanna telling Masrawy earlier this month that current negotiations center on lowering the Israeli input to 8% and expanding the agreement’s geographic coverage. The USTR notice says goods eligible for special tariff treatment remain subject to the new additional duties unless otherwise exempted, which could mean a narrower tariff advantage for QIZ exporters than the one they enjoyed under the previous reading of Trump’s tariff regime.

Cairo is moving the other way on US goods: US-made vehicles that comply with US federal safety standards now have a clearer route into Egypt, the Investment Ministry said following Investment Minister Mohamed Farid’s visit to GM Egypt’s Sixth of October factory, according to a statement. The ministry has opened the local market to vehicles that meet US Federal Motor Vehicle Safety Standards (FMVSS) — US safety rules issued by the National Highway Traffic Safety Administration that set minimum safety-performance requirements for vehicles and auto components.

This removes a barrier Washington had been pushing on: The USTR’s 2026 National Trade Estimate report (pdf) said Egypt had “completed important steps” toward accepting FMVSS, “moving closer to eliminating a significant barrier to the export of US automobiles and automotive parts to Egypt.” The report said Egypt would allow certain US vehicle standards and requirements, including FMVSS, to establish compliance with applicable Egyptian automotive requirements, while still needing to update its vehicle-part approval rules.

Imports are already gaining ground: Passenger-car imports rose 10% y-o-y to USD 1.68 bn in 1H 2026, from USD 1.53 bn a year earlier, Al Arabiya Business reports, citing data from the General Organization for Export and Import Control. Passenger cars accounted for 3.5% of Egypt’s non-oil imports during the period. US automotive exports to Egypt topped USD 256 mn last year, the statement cited US Assistant Commerce Secretary for Industry and Analysis Steven Haines as saying.

OUR TAKE- The two moves capture the asymmetry in Egypt-US trade right now — Washington is raising the cost of Egyptian access to the US market on forced-labor import-control grounds, while Cairo is removing a standards barrier for a US export category where demand is already recovering. The new duty does not close the US market to Egyptian exporters, but it dulls one of Egypt’s cleanest selling points at a time when the government and manufacturers have been trying to position the country as a lower-tariff production base. It also underlines the selective logic of the new US trade regime — Trump is using forced-labor enforcement to raise the cost of market access, while shielding the products the US needs most from the same pressure.