ISLAMABAD:The United States has introduced reciprocal tariffs on multiple countries, including Pakistan, as part of its strategy to reduce trade deficits and strengthen its domestic manufacturing sector. While some nations perceive this move as a challenge to their exports, others view it as an opportunity to expand their trade presence in the U.S. market.
Pakistan considers the tariff adjustments as a chance to boost its exports, particularly in textiles, rather than seeing them as a threat. The country’s primary exports to the U.S. consist of garments and home textiles, which make up nearly 70-80% of its total exports to the American market. With the U.S. imposing higher tariffs on Pakistan’s key competitors—Bangladesh and China—experts believe Pakistan could benefit significantly.
The new tariff structure includes a 29% duty on Pakistani goods, while India faces 26%, Bangladesh 37%, Sri Lanka 44%, and Vietnam 46%. Additionally, the ongoing U.S.-China trade dispute is expected to create opportunities for Pakistan to export products such as corn, meat, and sports goods.
In 2020, U.S. imports were valued at $2.4 trillion, rising to $3.3 trillion in 2024, but this surge also resulted in a $1.2 trillion trade deficit. To address this, the U.S. has opted to impose tariffs to encourage domestic production rather than implementing outright trade bans.
Pakistan’s total trade volume with the U.S. stands at $5.5 billion, positioning it as the 33rd largest exporter to the U.S. Of this amount, garments contribute $3.2 billion, while home textiles account for $1.5 billion. The elevated tariffs on China (54%) and Bangladesh (37%) provide Pakistan with competitive advantages of 8% in garments and 25% in home textiles. Although India has a slight edge with a 26% tariff compared to Pakistan’s 29%, analysts believe this margin is not substantial enough to significantly impact trade.
“This is not a major benefit for India, and Pakistan can mitigate any disadvantages by exploring alternative markets,” an official told The Express Tribune. The expected impact of U.S. tariffs on Pakistan is estimated to be between $600 million and $700 million, but experts suggest that trade diversions can offset these losses.
Officials highlight potential opportunities for Pakistan in light of the U.S.-China trade war. Some sectors still benefit from U.S. tariff exemptions, such as plastic polyethylene terephthalate (PET), which Pakistan exports to the U.S. with an annual trade value of $130 million.
Additionally, Pakistan has the potential to expand its corn exports, particularly since the U.S. is a leading corn producer and China a key importer. As a result of the trade conflict, Pakistan could capture a share of the Chinese market. The country’s corn exports surged from $12 million in 2020 to $347 million in 2023.
Meat exports also present a promising avenue. Traditionally, China has sourced its meat from the U.S., but a memorandum of understanding (MoU) signed five years ago between Pakistan and China has led to Pakistan’s meat exports reaching $375 million.
“Despite some trade barriers due to U.S. tariff policies, Pakistan could gain around $250 million from emerging opportunities,” an official estimated. “By offering incentives to the agriculture and livestock sectors, Pakistan can further boost exports in these areas.”
Sports goods also hold strong export potential, particularly in markets like the U.S. and China. However, industry experts stress the need for aggressive marketing strategies to fully capitalize on these openings.
Pakistan has faced a trade deficit of $1 billion over the past eight months, but higher remittances—expected to reach $35 billion this year—are projected to help stabilize the economy. “There will be no dollar crisis in the country,” assured a Commerce Ministry official.
Pakistan is also exploring new trade avenues, including African markets and the Gulf Cooperation Council (GCC) countries. Negotiations for a Free Trade Agreement (FTA) between Pakistan and GCC nations are reportedly in their final stages.
While export-driven economies like Japan rely heavily on trade with the U.S., Pakistan’s GDP is less dependent on exports, with only 8% of its economy tied to trade. As a result, shifts in U.S. trade policy are unlikely to have a major impact on Pakistan’s overall economic stability.
U.S. Trade Overview:
In 2024, U.S. imports reached $3.36 trillion, with Mexico leading the way at a 15% share, followed by China, Canada, Germany, and Japan, whose shares range from 5% to 14%. Pakistan’s contribution remains relatively small at 0.16%, while competitors such as Vietnam (4.2%), Bangladesh (0.26%), Sri Lanka (0.09%), and India (2.7%) hold larger shares.
Industry experts believe that while Pakistan has historically relied on textile exports to the U.S., the imposition of higher duties on competitors like Bangladesh, Vietnam, and China could allow it to diversify its product offerings.
“Pakistan has a strong chance to increase textile exports to the U.S. due to the tariff hikes on its competitors,” said Textile Association General Secretary Shahid Sattar. However, he acknowledged that Pakistan will still face competition from Indian textiles in the American market.
A report from Topline Research noted that while Pakistan’s textile exports could encounter some challenges due to its duty gap with India, the higher tariffs on Bangladesh and Vietnam will help mitigate the impact and sustain export levels in the U.S. market.
