KEY POINTS
- The US has imposed a 29% tariff on all Pakistani exports
- Pakistan could benefit from higher tariffs on competitors like China, Bangladesh, and Vietnam
- Pakistan’s textile sector faces significant challenges due to the tariff increase
- The tariff hike could create opportunities for Pakistani exporters as US importers seek cheaper alternatives
ISLAMABAD: The United States has imposed a sweeping 29% tariff on all Pakistani exports, part of President Donald Trump’s latest global trade measure affecting 180 countries.
While the move presents a serious challenge for Pakistan’s already fragile economy, analysts believe the country could also reap unexpected gains due to even steeper US tariffs on its key competitors, China, Bangladesh Vietnam, and India.
Interestingly, the 29% tariff is still significantly lower than the 58% average tariff Pakistan imposes on US products, which may weaken Islamabad’s ability to negotiate exemptions.
However, Pakistan’s new tariff rate remains lower than those levied on China (34%), Bangladesh (37%), and Far East Asian countries like Vietnam (46%).
This could create an opening for Pakistani exporters if US importers seek alternatives to these more heavily taxed economies.
It is, however pertinent to mention here that Trump remained relatively soft on India as it slapped only a 26% tariff as against the 52% charged by the Indians to the US products.
Earlier Trump had called India among the highest chargers in the world with a vow to reciprocate the same.
Impact on Pakistan’s economy
Pakistan, a major exporter of textiles, sports goods, and leather products, has long relied on the US market.
The sudden tariff hike threatens to make Pakistani goods more expensive for American buyers, leading to a possible drop in export demand.
Given that the textile sector alone contributes over 60% of Pakistan’s exports, industry leaders warn of severe economic strain.
These tariffs are a significant setback, said Javed Balwani, Chairman of the Pakistan Apparel Forum. “We were already struggling with high production costs and inflation. This will further hurt our competitiveness in the global market,” he added.
Financial experts have also raised concerns about the Pakistani rupee, which has been under pressure due to trade disruptions.
The tariffs will reduce export earnings, increase our trade deficit, and put additional pressure on the currency,” noted economist Dr. Hafeez Pasha.
Windfall advantages amid competitor setback
Despite the immediate economic risks, Pakistan might find unexpected opportunities due to much higher US tariffs on rival economies China (34% tariffs), Bangladesh (37%), Vietnam (46%), and India (26%)—all of which compete directly with Pakistan in the textile and apparel sector—will see even higher cost increases.
US importers looking for cheaper alternatives may turn to Pakistan, where tariffs are lower than on China, Bangladesh and Vietnam.
Leather and sports goods exports from Pakistan could also benefit, as Indian and Chinese competitors would become more expensive after Trump Tariffs that would be effective from April 9.
The IT and business process outsourcing (BPO) sector in Pakistan could see an influx of contracts as US firms seek alternatives to exporters with higher tariff burdens.
Global and political reactions
The tariff announcement has sparked “international condemnation.” The Chinese Ministry of Commerce called the move “unilateral bullying” and pledged to take “all necessary countermeasures.”
The European Union also criticized the tariffs. European Commission President Ursula von der Leyen stated, “These protectionist policies threaten the stability of global trade. We are evaluating our response”.
Spain’s Prime Minister Pedro Sánchez was particularly vocal, calling the tariffs “19th-century protectionism.”
Meanwhile, Zhao Shiren, the Chinese Consul General in Pakistan, warned that the new tariffs would “harm US consumers and businesses more than their intended targets.”
Pakistan’s response and next steps
While government officials in Islamabad have yet to make an official statement, trade representatives are calling for diplomatic engagement with Washington.
Pakistan must urgently negotiate trade exemptions or at least reduce tariff levels on specific industries where we are non-threatening to US producers,” suggested Ahsan Iqbal, Minister of Planning and Development responding to a question in this regard.
Analysts believe that while the immediate impact will be negative, Pakistan has an opportunity to position itself as a viable alternative to more heavily taxed countries.
If the government supports exporters through subsidies, trade diplomacy, and infrastructure improvements, Pakistan could turn this crisis into an opportunity.
Last but not least Pakistan stands at a crossroads. The 29% US tariff threatens economic stability, yet the even higher tariffs on competitors like China, Bangladesh, Vietnam, and India could provide a silver lining.
With strategic policy measures and active global engagement, Pakistan could leverage these disruptions to increase its US market share—but only if it moves fast.
