Karachi: Pakistan is facing a new challenge after the United States imposed a 29% tariff on its exports. The move is part of US President Donald Trump’s strategy to protect the US economy. While Pakistani exporters are concerned, they believe the effect won’t be too severe as other countries like India, China, Vietnam, and Bangladesh are also facing high tariffs.
Tariff Effect on Pakistan’s Exports
Pakistani exporters aren’t too concerned with the 29% tariff. They are of the view that because other nations will be subjected to the same, if not greater, tariffs, the effect on the exports of Pakistan won’t be so serious. United Business Group (UBG) President Zubair Tufail elucidated that while the tariffs would be negative, it won’t be drastic enough to cause a massive loss to exports to the US.
Despite high tariffs, the exporters expect that the government would devise a strategy to handle the situation. The imports from the US are not significant relative to overall imports for Pakistan, so it can offset the adverse effects by keeping the US imports zero-rated. It may increase the exports of Pakistan by minimizing the cost of imports from the US, including cotton, soybeans, and pulses.
Potential Remedies and Suggestions
Experts such as Javed Bilwani, who is an exporter, propose that zero-rating US imports can minimize the burden of the new tariff. Pakistan had imported $1.87 billion worth of goods from the US in 2024 against $5.4 billion worth of exports to the US. The trade surplus with the US would be able to cushion the blow of the tariffs.
Pakistani exports to China are significantly lesser, and according to experts, the increasing tariffs on China and Vietnam would be in favor of Pakistan since these two nations are the top competitors in the US market.
Challenges and Opportunities for Textile Exports
One major concern is for the textile industry, which constitutes a large portion of Pakistan’s exports to the US. Adil Nakhoda, an Institute of Business Administration economist, stated that the textile industry might be the most affected in the short term. But Pakistan can look to boost textile exports to the EU as an alternative.
Short-Term vs. Long-Term Impact
Economist Ali Hasanain explained that although the US is a significant trade partner of Pakistan, the immediate effect of the tariff may not be as dire as anticipated. Even if exports to America slow down, it will not drastically reduce Pakistan’s economy. The long-term implications will hinge on how Pakistan approaches the issue and if it can innovate in sectors with an edge over other nations dealing with similar tariffs.
Conclusion: Adapting to the New Tariff Reality
Though the 29% tariff is a challenge for Pakistan’s exports, especially textiles, there are ways to reduce the effect. The nation can target other markets, like the EU, and try to lower the cost of production for its key exports. Innovative solutions and adapting to the new tariff environment will be the way for Pakistan to retain its export prowess despite the US tariffs.
