UAE is emerging as a global trade hub, offering competitive advantages in managing supply chain complexity
Geopolitical uncertainties, rising tariffs, and maritime disruptions are reshaping supply chains and fundamentally altering global trade infrastructure, trade finance, and currency mechanisms. Rather than waiting for a return to stability, businesses are actively adapting, exploring alternative trade routes, diversifying partners, and reimagining their supply chains. The traditional model of efficiency at all costs is fading, replaced by a focus on resilience, adaptability, and long-term sustainability. Once-exceptional challenges are the new normal for global commerce, and financial institutions must keep up.
The new corporate playbook
Faced with rising uncertainties, companies are shifting production and sourcing closer to their end markets, embracing regionalized supply chains. According to McKinsey’s 2024 Global Supply Chain Leader Survey, 60 percent of firms report they are already regionalizing their supply footprint, and roughly 73 percent have adopted or advanced dual-sourcing strategies. This approach limits exposure to distant disruptions while boosting responsiveness and predictability.
Additionally, businesses are beginning to treat inventory as strategic insurance, accepting higher holding costs to create buffers against tariff increases and logistical breakdowns.
These strategies are being supported by the emergence of global trade hubs such as the UAE, which are rapidly becoming critical nodes in the evolving supply chain. With world-class ports, free zones, and bonded facilities, the UAE offers companies a competitive advantage in managing supply chain complexity. For example, Jebel Ali Port and Dubai’s free zones not only enable re-export and light processing, but also act as transshipment points that help businesses navigate tariff barriers and reduce costs.
A key feature making the UAE particularly compelling is its ecosystem of supportive infrastructure. Companies operating in the region benefit from trade finance solutions, customs-facilitation services, and digital platforms that improve visibility and reduce friction across the supply chain. For major retailers and e-commerce platforms, UAE trade hubs are becoming indispensable consolidation centers where goods are aggregated, packaged, and redistributed to global markets.
Reconsidering the dollar’s dominance
Rising tariffs and geopolitical shifts are also challenging the dominance of the US dollar in global trade. Though the dollar remains the leading medium of exchange, local currency agreements and digital trade finance solutions are gaining momentum. For instance, the growing collaboration between India and the UAE, which enables bilateral trade settlements in rupees and dirhams, marks a significant shift toward reducing reliance on third-party currencies.
For businesses, this shift has far-reaching benefits. Local currency trade lowers exposure to dollar volatility, simplifies payment flows, and reduces hedging costs. Beyond financial savings, it also strengthens the competitiveness of exporters and importers, boosts regional financial ecosystems, and enhances financial inclusion for SMEs that may lack access to traditional global finance networks.
The move toward diversified currency mechanisms reflects the broader transformation of global commerce: trade is becoming less centralized, and more adaptive to regional needs.
Financial institutions shaping resilient global trade
As companies rewire their supply chains, financial institutions are playing an essential role in enabling the transition. No longer mere facilitators of transactions, banks are evolving into strategic partners that help companies manage complexity and turn volatility into opportunity.
Banks are building tailored trade finance solutions, such as structured financing and extended credit terms, to address payment and currency risks associated with longer and more unpredictable trade routes. They are also amplifying the role of key trade hubs such as the UAE by offering inventory financing, bonded warehousing services, and customs processing support for businesses leveraging re-export centers.
Moreover, banks are enabling the integration of local currency settlements through digital platforms that reduce transaction costs and speed up settlement times. Fintech-driven innovation including blockchain, AI, and digital documentation is also helping companies execute cross-border trade with greater transparency, security, and efficiency. These tools are transforming historically cumbersome processes into seamless and predictable operations.
Global trade: From fragmentation to resilience
What we are witnessing is not a retreat from globalization, but a recalibration of priorities. In 2024, world trade in goods and commercial services still grew by 4 percent to reach $32.2 trillion, underscoring that global commerce remains robust even as its structure evolves. Supply chains are becoming shorter, smarter, and more selective, and the winners will be those who embrace resilience and innovation.
Financial institutions have a unique opportunity to play a decisive role in this transformation. By underwriting liquidity that matches new trade realities, blending credit and insurance to protect against shocks, and funding the digital infrastructure needed to turn uncertainty into opportunity, banks can anchor global commerce through turbulence. At Mashreq, we recognize the importance of our role within the UAE’s rapidly evolving trade ecosystem and are committed to working with businesses to unlock new value in global supply chains.
Policymakers also have a critical part to play. By fostering collaboration and creating frameworks that balance openness with security, governments can help global trade systems remain competitive and inclusive.
The stakes could not be higher. On the one hand, we have the opportunity to create a stronger, more sustainable, and more inclusive global economy. On the other, we risk sliding into fragmented, costly, and inaccessible trade systems. The choice is clear: we must rethink supply chains not as fragile lines of cost efficiency, but as resilient networks of shared prosperity, and build financial solutions tailored to this new normal.
Joel Van Dusen, head of Corporate and Investment Banking at Mashreq