Egypt and the US Sign US$235 Million Locomotive Deal, Amid Tariff Uncertainty

Amid global tariff uncertainty, Egypt and US trade ties reinforced with a US$235 million railway modernization deal.

By Sudhanshu Sing

On April 1, 2025, Egypt’s Ministry of Transport and the National Railways Authority finalized a set of contracts valued at US$235 million with Progress Rail (PRL), a US-based rail solutions provider. The deal marks a strategic step in Egypt’s national plan to modernize its railway infrastructure and reinforce its freight capacity. The signing was witnessed by the US Ambassador to Cairo Herro Mustafa Garg and reflects trade cooperation between the two countries, even as global tariff tensions cast uncertainty on international logistics and supply chains. USA reported a trade surplus of US$3.5 billion with Egypt in 2024, unlike its trade relations with other nations. This can potentially reduce the uncertainties of tariffs on Egyptian exports.

The contracts cover modernization, parts supply, and technical support services, aligning with Egypt’s goals to improve operational efficiency, reduce emissions, and strengthen local capabilities in locomotive maintenance.

Breakdown of the locomotive agreement

The agreement includes three major components:

• US$185 million for modernizing 1,000 diesel-electric locomotives, including replacing outdated systems with a new engine, the EM2000 control system, and upgrades to the air brake, cooling, and electrical systems;
• A 15-year supply contract worth US$42 million for spare parts for 141 locomotives, ensuring operational continuity and reducing downtime; and
• A five-year technical assistance contract valued at US$5 million, with an option to extend for another five years. The contract includes Progress Rail supervision and skill transfer.

These upgrades are expected to cut oil consumption by 50 percent and improve fuel efficiency by over 3 percent, according to Deputy Prime Minister and Minister of Industry and Transport Kamel El-Wazir.

Localization and operational strategy

The agreement supports Egypt’s localization agenda by involving the Egyptian Company for Railway Maintenance and Services (ERMAS), a subsidiary of the National Railways Authority. ERMAS will handle overhaul work for key reused components such as traction motors and main generators using some locally sourced parts.

El-Wazir emphasized the importance of this localization element, noting that it not only builds domestic expertise but also reduces dependency on discontinued imported components. The upgrades are expected to align Egypt’s refurbished fleet with its existing EMD JT42CWRM locomotive class.

As of the latest data, Egypt has now added 210 new locomotives to its fleet and rehabilitated 99 others in collaboration with various global companies. The broader modernization push includes both upgrades and regular maintenance within the ongoing rail overhaul initiative.

Strategic context: Tariff backdrop

The deal was signed just days before a major policy announcement in the United States. On April 2, 2025, US President Donald Trump implemented a set of new tariffs ranging from 10 to 50 percent on imports, including from several Middle East and North Africa (MENA) partners. Framed by the administration as a national economic measure, the new tariff policy introduced heightened trade uncertainty.

However, on April 9, 2025, the US administration temporarily paused tariff increases for countries that did not impose retaliatory measures. Under this revision, Egypt’s tariff rate remained unchanged at 10 percent, unlike Jordan and Israel, whose rates were reduced.

This geopolitical backdrop adds relevance to the Egypt-US railway agreement. It highlights how bilateral cooperation is continuing despite global trade disruptions and underscores the significance of stable infrastructure and logistics investment in the region.

Sectoral and economic implications

The locomotive modernization effort is positioned to yield tangible operational and financial benefits. By phasing out obsolete parts and standardizing upgrades across its diesel fleet, Egypt expects to reduce fuel consumption, streamline inventory management, and cut maintenance costs over time.

The U.S. commercial footprint in Egypt continues to expand. In 2024, total goods trade between the two countries reached US$8.6 billion. U.S. goods exports to Egypt amounted to US$6.1 billion, reflecting a 36 percent increase from the previous year. Imports from Egypt stood at US$2.5 billion, resulting in a U.S. goods trade surplus of US$3.5 billion, a 69.4 percent year-on-year increase. This locomotive agreement adds to that momentum, reinforcing American supplier participation in Egypt’s infrastructure overhaul.

Additionally, the spare parts supply contract ensures long-term maintenance continuity for 141 units, while the technical support program facilitates knowledge transfer. These arrangements strengthen Egypt’s transport infrastructure resilience and workforce capabilities.

For U.S.-based rail companies, the deal demonstrates ongoing demand for specialized equipment and services in emerging markets, particularly in regions pursuing energy efficiency and modernization objectives.

In brief

The US$235 million agreement between Egypt’s National Railways Authority and Progress Rail represents more than a procurement initiative. It marks a bilateral commitment to improving core transport infrastructure, supporting localization goals, and navigating a trade environment shaped by tariff uncertainty. As Egypt continues its rail sector overhaul, partnerships that combine technical expertise, long-term service planning, and supply continuity are likely to remain central.

Also read:

• Trump’s Tariffs Effect on the MENA Region: Overview and Implications
• US Trump’s Tariffs on Türkiye: Risks and Opportunities

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