Analysis | Read time: 9 minutes

The UAE’s We the Emirates 2031 national action plan was announced to double GDP to AED 3 trillion by 2031, but mid-2026 has brought global trade conditions that its architects did not anticipate[1].

A US Supreme Court decision in February 2026 struck down country-specific tariffs under the International Emergency Economic Powers Act, leading the US government to replace them with a temporary 10% universal tariff under Section 122 of the Trade Act[2].

Meanwhile, the temporary closure of the Strait of Hormuz disrupted regional shipping and prompted the International Monetary Fund to cut its 2026 growth forecast for Middle East oil exporters to 1.4%[1].

This analysis assesses which We the Emirates 2031 targets are on track, which face pressure, and what the numbers mean for businesses operating in or trading with the UAE.

GCC Fiscal Health: What the Numbers Show

GCC governments are adjusting to lower hydrocarbon revenues by cutting spending, selling assets, and introducing new domestic taxes[7]. Their fiscal positions vary considerably, and understanding those differences matters for anyone choosing where to base operations or direct investment.

Saudi Arabia revised its 2025 budget deficit to SR 245 billion ($65 billion), representing 5.3% of GDP, the highest deficit in five years, driven by an 8% fall in oil revenues alongside ongoing Vision 2030 spending[8]. Saudi public debt is projected to rise toward 35% of GDP by 2028[8]. Bahrain’s fiscal position is more exposed: its budget requires oil above $130 per barrel to break even, a threshold far above the current Brent price near $58[4]. Oman requires $80 to $85 per barrel and is making gradual progress, but remains sensitive to price moves[4].

The UAE sits in a different position from its neighbours. Its fiscal breakeven price is between $50 and $65 per barrel, meaning the federal budget stays near balance even at current oil prices[4]. Non-oil sectors contributed 75.5% of GDP in 2024, rising to 77.3% of total output in the first quarter of 2025[9][10]. When oil prices fall, UAE government revenues do not drop in proportion, because most national income now comes from commercial activity rather than hydrocarbon exports[4]. A 9% corporate tax on profits above AED 375,000, introduced in 2023, adds a stable additional revenue stream[4].

For UAE-based exporters, the fiscal gap between the UAE and its Gulf neighbours creates a practical advantage. Bahrain and Oman face tighter government budgets, which tend to constrain public procurement and delay infrastructure spending. Businesses that sell into those markets should factor longer payment cycles and reduced government contract activity into their projections.

CountryFiscal Breakeven (per barrel)Gap to $58 BrentDebt TrajectoryNon-Oil Revenue
Bahrain$130+$70+ deficitHigh and risingLow
Oman$80-85$22-27 deficitStabilizingIncreasing
Saudi Arabia$90-96$32-38 deficitRising toward 35% of GDPExpanding
UAE$50-65Near balanceStableStrong

Sources: [4][8]

Trade Targets: How Close Is the AED 4 Trillion Goal?

The central trade objective of We the Emirates 2031 is to grow UAE foreign trade to AED 4 trillion[5]. When US tariffs and Chinese counter-moves began reshaping global flows in 2025, some analysts questioned whether that target remained achievable. The actual trade data from 2025 answers that question directly.

In 2025, UAE non-oil foreign trade passed $1 trillion (AED 3.8 trillion), a 27% increase on the previous year[15]. In the first quarter of 2025 alone, non-oil trade reached AED 835 billion, up 18.6% year on year[9]. Non-oil exports surged 40.7% to AED 177.3 billion, accounting for more than 21% of total foreign trade for the first time[9]. Trade with India grew 31%, trade with Saudi Arabia grew 127%, and trade with China grew 9.6% in the same period[9]. Based on this trajectory, UAE leadership announced in mid-2025 that the AED 4 trillion target is expected to be reached by 2027, four years ahead of schedule[9].

The UAE’s 36 bilateral Comprehensive Economic Partnership Agreements (CEPAs) are a core reason for this performance[15]. CEPAs reduce tariffs, cut customs procedures, and remove non-tariff barriers[15]. The UAE-Azerbaijan agreement, which entered force on 15 April 2026, removes tariffs on more than 95% of qualifying goods and opens corridors into Central Asia and the Caucasus[16]. The UAE-Serbia agreement, in force since 1 June 2025, is projected to add $351 million to UAE GDP by 2032 and marks the country’s first trade deal with a non-WTO member[17].

KPI2031 TargetJune 2026 StatusAssessment
National GDPAED 3 trillionAED 1.77 trillion in 2024Feasible at 4% annual growth
Non-Oil ExportsAED 800 billionAED 177.3 billion in Q1 2025Highly feasible, 40.7% annual growth
Total Foreign TradeAED 4 trillionAED 3.8 trillion in 2025Expected by 2027
Annual FDI Inflow$65.3 billionNational Investment Strategy approved March 2025Dependent on global capital conditions
Tourism GDPAED 450 billionExpandingOn track

Sources: [1][5][6][9][10][18][19]

CEPA Friction: When Trade Agreements Create New Problems

Bilateral trade agreements reduce tariffs but also create opportunities for importers to exploit the gap between preferential and standard duty rates. This dynamic, known as duty arbitrage, is already affecting the UAE’s relationship with India.

Under the India-UAE CEPA, gold bar imports from the UAE to India rose from $2.9 billion in 2022 to $16.5 billion in 2025[20]. The Global Trade Research Initiative called for an immediate review of the agreement’s precious metals provisions in May 2026[20]. India responded by restricting silver imports from the UAE in mid-May 2026 and doubling standard import duties on gold and silver[20]. The unintended effect of those higher standard duties is that they increase the relative value of the CEPA preferential rate, which may encourage more metals to be routed through the UAE rather than less[20].

Other agreements carry their own sensitivities. The UAE-Jordan CEPA, in force since May 2025, grants preferential treatment to goods originating in UAE free zones[21]. However, as Canada and the UAE prepare for negotiations, Canadian exporters have flagged concerns about non-tariff barriers and import sensitivities[21]. Managing these regulatory differences, partner by partner, is one of the main operational challenges now facing UAE trade authorities[21].

Domestic Policy Anchors for Non-Oil Growth

The UAE’s approach to diversification combines centralized policy direction with the fast adoption of specific technologies. This model, which UAE planners call ‘governance accelerationizm’ (the systematic compression of the time between policy decision and economic output), is visible in several active federal initiatives[10].

Technology and government efficiency

The Emirates Blockchain Strategy targets a reduction of AED 11 billion in document processing costs, the elimination of 398 million printed documents annually, and a saving of 77 million working hours[5]. The Fourth Industrial Revolution strategy promotes the adoption of advanced digital and biological technologies to support economic resilience[5].

Energy and sustainable infrastructure

The Barakah Nuclear Energy Plant, the first nuclear facility in the Arab world, gives companies access to a stable and lower-cost clean energy supply[18]. Masdar City serves as a working model for sustainable urban development and supports the export of green products and technologies under the country’s Green Growth Strategy[18].

Space and advanced manufacturing

The UAE space program allocates 55.7% of its budget to government activities and 44.3% to commercial projects, with the explicit goal of building a local commercial space market rather than solely government capability[10]. It funds domestic space companies, offers preferential contract access, and runs training program for Emirati engineers[10].

Three Actions for Decision-Makers Operating in the UAE

Verify rules of origin before claiming CEPA preferences

Local manufacturing firms must show genuine processing within the UAE to qualify for preferential tariff rates under CEPA agreements[15]. Simple transit assembly no longer meets the threshold. India’s targeted border inspections and silver import restrictions signal that partner governments are actively monitoring compliance, and penalties for misclassified goods can include retroactive duty payments and suspension of preferential access[20].

Structure operations to claim the R&D tax credit

A refundable Research and Development tax credit, effective for tax periods starting 1 January 2026, offers a 30% to 50% credit on qualifying expenditures[23]. For businesses subject to both the standard 9% corporate tax on profits above AED 375,000 and the 15% Domestic Minimum Top-up Tax that applies to multinational groups with revenues above EUR 750 million, this credit directly reduces the net tax cost of technical investment[11][24]. Planned credits for high-value employment activities will reduce salary costs for senior executives and core technical staff in a further tax period[23].

Use newly opened trade corridors to bypass high-tariff routes

The UAE’s expanding CEPA network now gives businesses a practical route around elevated Western tariffs[15]. The agreements with Azerbaijan and Serbia connect UAE exporters to Central Asian, Caucasian, and Eastern European markets with reduced tariff exposure[16][17]. Businesses should map their current export routes against the full CEPA network to identify where preferential rates apply and where they are not yet being claimed.

What Comes Next

Most We the Emirates 2031 trade targets are running ahead of schedule, and the UAE’s low fiscal breakeven price gives it more policy room than any of its Gulf neighbors[4][9]. The more consequential long-term question is not whether the AED 4 trillion trade target is reached, but what the composition of that trade looks like once it is.

If the majority of growth continues to come from re-exports and precious metals transit rather than manufactured goods and services with genuine UAE value added, the next set of targets, those built on innovation, R&D, and skilled employment, will be harder to hit.

The R&D tax credit, the Blockchain Strategy, and the space program are all pointed at this problem. Whether they shift the composition of output in time will determine whether 2031 is a genuine inflection point or a milestone that needs to be reset.