US tariffs have created a serious challenge for Pakistan’s export industries, with a steep 29% hike affecting key sectors like textiles, leather, salt, and steel.
The United States recently imposed a 29% tariff on a wide range of Pakistani goods—including textiles, surgical instruments, rice, cement, and more. This move is part of a broader strategy by President Donald Trump aimed at boosting US manufacturing and reducing trade deficits.
For Pakistan, these tariffs pose serious risks to exports, foreign reserves, and jobs. However, with the right policies, this situation could also bring new opportunities through trade reforms and market diversification.
Why Are the US Tariffs a Big Deal for Pakistan?
The US is Pakistan’s largest export destination, accounting for over $6 billion annually — nearly 18% of Pakistan’s total exports.
The textile industry, which makes up 75-80% of these exports, is especially vulnerable. Other sectors like leather, salt, and surgical goods are also likely to face reduced demand in the US market due to increased prices caused by the tariffs.
Impact on Key Pakistani Industries
1. Textile and Garments
Pakistan’s textile sector competes with India, Bangladesh, Vietnam, and China. Here’s how tariffs compare:
- Pakistan: 29%
- India: 26%
- Bangladesh: 37%
- Vietnam: 46%
- China: 34%
While India now has a 3% advantage, Pakistan can still benefit from higher duties on competitors like Vietnam and Bangladesh — but only if it acts fast.
2. Leather, Surgical, and Salt Exports
Pakistan’s leather and surgical goods face reduced competitiveness due to higher US import costs. The salt industry, which held a 60% market share in US imports, now fears losing ground due to the 29% duty.
3. Cement, Steel & Other Sectors
Companies like DG Khan Cement, International Steels, and Fast Cables are also exposed to the US market and may see a decline in orders.
What’s at Stake for the Economy?
In FY24, Pakistan had a $3.57 billion trade surplus with the US. But with reduced exports, this gap could shrink, putting pressure on foreign exchange reserves and employment in export-driven industries.
The new tariffs also arrive at a time when Pakistan’s economy is already facing inflation, currency pressure, and low investor confidence.
How Pakistan Can Counter the Tariffs
1. Negotiate a Trade Agreement
Pakistan must urgently start talks with the US to reduce tariffs on textiles and other key goods. Using diplomacy and trade missions, a preferential trade agreement (PTA) or mutual tariff relief can be explored.
2. Lower Tariffs on US Imports
By reducing duties on items like cotton, soybeans, and machinery from the US, Pakistan can use this as leverage for reciprocal tariff relief.
3. Improve Export Competitiveness
Invest in:
- Energy subsidies for manufacturers
- Advanced machinery for production
- Training labor for better product quality
This helps local businesses absorb the cost impact and stay competitive.
4. Diversify Export Markets
Pakistan should look to Gulf, EU, and African markets through Free Trade Agreements (FTAs). Reducing reliance on the US market will create more resilience.
5. Promote Tariff-Free Products
Some products like plastic PET still enjoy duty exemptions in the US. Pakistan should boost production and export of such categories.
Is There a Silver Lining?
Yes. Since competitors like Bangladesh, Vietnam, and China face even higher tariffs, Pakistan has a window to grab more US market share — especially in textiles — if it takes fast and bold actions.
The 29% US tariff on Pakistani products is a serious challenge for local exporters and the national economy. But with smart policy moves, strong negotiations, and a focus on export reform, Pakistan can not only survive — but grow in this shifting trade environment.
Now is the time for Pakistan to act, protect its exporters, and build a more competitive and diversified trade strategy.