\u2022 Study by Pakistan Institute of Development Economics says US policy should serve as \u2018wake-up call\u2019 for export diversification
\n\u2022 Warns tariffs may cost textile sector half a million jobs; leather, rice, surgical instruments, sporting goods also vulnerable<\/p>\n
ISLAMABAD: The increase in trade tariffs on Pakistani products announced by US President Donald Trump \u2014 later suspended temporarily \u2014 could have a devastating impact on Pakistan\u2019s important exports and serves as a wake-up call for diversification, according to a state-owned think tank.<\/p>\n
\u201cA storm may be brewing on Pakistan\u2019s trade horizon,\u201d said the Pakistan Institute of Development Economics (Pide), adding that the \u201cproposed reciprocal tariffs by the United States could have a devastating impact on the country\u2019s export sector\u201d.<\/p>\n
In a stark policy note, the institute cautioned that these tariffs could lead to macroeconomic instability, significant job losses and a critical reduction in foreign exchange earnings.<\/p>\n
The study, titled \u2018Impact of Unilateral Tariff Increase by United States on Pakistani Exports\u2019 and conducted by Dr Muhammad Zeshan, Dr Shujaat Farooq and Dr Usman Qadir, analysed the consequences of a proposed 29 per cent reciprocal tariffs on Pakistani exports to the United States.<\/p>\n
When added to the existing 8.6pc Most Favoured Nation (MFN) tariff, the total duty could reach 37.6pc, the policy note said. The result would likely be a 20-25pc decline in exports to the US, translating into an annual loss of $1.1-1.4 billion, with the textile sector bearing the brunt of the blow.<\/p>\n
In the fiscal year 2024, Pakistan exported $5.3bn worth of goods to the United States, making it the country\u2019s largest single-country export market. A significant portion of these exports were textiles and apparel, which already face tariffs as high as 17pc.<\/p>\n
If the proposed tariffs are implemented, Pakistan\u2019s price competitiveness would be severely eroded, possibly allowing regional competitors like India and Bangladesh to capture the market share.<\/p>\n
The economic consequences would extend beyond textiles, the Pide analysis warned. Major exporters such as Nishat Mills and Interloop may be forced to reduce production, threatening more than 500,000 jobs. Non-textile exports \u2014 including leather, rice, surgical instruments and sports goods \u2014 also face increased vulnerability.<\/p>\n
Despite the risks, Pide viewed the crisis as an opportunity for strategic transformation. The policy note encourages Pakistan to take swift and thoughtful action in response. In the short term, Pide recommended that Pakistan engage in high-level diplomatic efforts to highlight the mutual costs of the tariffs and preserve long-standing trade relations.<\/p>\n
For example, the United States exported $181 million worth of cotton to Pakistan in 2024, a trade stream that is now at risk. Pakistan might also consider reducing tariffs on select US imports \u2014 such as machinery, scrap metal and petroleum \u2014 to create room for negotiation. Additionally, Paki\u00ads\u00adtani firms could be encouraged to use more US-origin inputs like cotton and yarn to help maintain value chains and seek tariff exemptions.<\/p>\n
For the long term, Pide emphasised the need to diversify both export products and markets. Emerging destinations such as the European Union, China, Asean nations, Africa and the Middle East offer growth potential in sectors like IT, halal food, processed foods and sports goods.<\/p>\n
The report also called for measures to reduce energy and logistics costs, streamline regulations and promote innovation and technology adoption. Furthermore, a comprehensive US trade strategy is necessary \u2014 one that focuses on building synergies in technology, agriculture, energy and value-added manufacturing.<\/p>\n
On the international front, Pide noted that the proposed US tariffs exceed the World Trade Organisation\u2019s (WTO) bound tariff ceiling of 3.4pc, potentially violating multilateral trade rules. While legal recourse through the WTO remains an option, Pakistan\u2019s limited fiscal resources may hinder such efforts, it said. More importantly, the tariffs ignore the interconnected nature of global trade.<\/p>\n
The US-Pakistan textile loop is a prime example \u2014 American cotton supplies Pakistani mills, which in turn export finished garments to the US. Disrupting this value chain benefits neither country.<\/p>\n
\u201cThe road ahead is challenging, but it also presents a chance for Pakistan to recalibrate and strengthen its export framework,\u201d the report noted.<\/p>\n","protected":false},"excerpt":{"rendered":"
\u2022 Study by Pakistan Institute of Development Economics says US policy should serve as \u2018wake-up call\u2019 for export diversification \u2022 Warns tariffs may cost textile sector half a million jobs; leather, rice, surgical instruments, sporting goods also vulnerable ISLAMABAD: The increase in trade tariffs on Pakistani products announced by US President Donald Trump \u2014 later […]<\/p>\n","protected":false},"author":1,"featured_media":8124,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[],"class_list":["post-8123","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business-news"],"_links":{"self":[{"href":"https:\/\/weeklyyoung.pk\/index.php?rest_route=\/wp\/v2\/posts\/8123","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/weeklyyoung.pk\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/weeklyyoung.pk\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/weeklyyoung.pk\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/weeklyyoung.pk\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=8123"}],"version-history":[{"count":1,"href":"https:\/\/weeklyyoung.pk\/index.php?rest_route=\/wp\/v2\/posts\/8123\/revisions"}],"predecessor-version":[{"id":8125,"href":"https:\/\/weeklyyoung.pk\/index.php?rest_route=\/wp\/v2\/posts\/8123\/revisions\/8125"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/weeklyyoung.pk\/index.php?rest_route=\/wp\/v2\/media\/8124"}],"wp:attachment":[{"href":"https:\/\/weeklyyoung.pk\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=8123"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/weeklyyoung.pk\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=8123"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/weeklyyoung.pk\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=8123"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}