ISLAMABAD: A state-owned think tank has warned that the United States’ proposed tariff hikes on Pakistani goods — initially announced by former President Donald Trump and now temporarily suspended — could severely damage Pakistan’s export sector, particularly textiles, risking up to $1.4 billion in annual losses.
In a policy note titled “Impact of Unilateral Tariff Increase by United States on Pakistani Exports”, the Pakistan Institute of Development Economics (PIDE) cautioned that the US-imposed 29% reciprocal tariffs, when added to the existing 8.6% MFN tariff, would total nearly 38%, triggering a 20–25% drop in exports to the US. Pakistan exported $5.3 billion to the US in FY2024 — the highest for any single country — with textiles and apparel leading the pack.
The study, conducted by Dr Muhammad Zeshan, Dr Shujaat Farooq, and Dr Usman Qadir, warned of significant job losses and macroeconomic instability. Major exporters like Nishat Mills and Interloop may be forced to scale down operations, jeopardizing over 500,000 jobs. Non-textile sectors including leather, rice, surgical tools, and sports goods are also at risk.
PIDE urged immediate diplomatic engagement to mitigate the fallout, including leveraging bilateral trade such as the $181 million in US cotton exports to Pakistan. It also proposed reducing tariffs on key US imports to build goodwill and maintain supply chain linkages.
Long-term strategies include export diversification toward the EU, China, ASEAN, Africa, and the Middle East, as well as investment in IT, halal food, and value-added manufacturing. PIDE also flagged a potential WTO rules violation, as the proposed tariffs exceed the allowed ceiling of 3.4%.
“The crisis offers a pivotal moment for Pakistan to reform, diversify, and build a resilient export strategy,” the report concluded.
Story by Khaleeq Kiani
