The Institute of Cost and Management Accountants of Pakistan (ICMA) has published a report regarding the 29 percent tariff that the United States has placed on exports from Pakistan. This tariff affects a wide range of goods, but ICMA focused on its impact on Pakistan’s textile exports, which make up over 70 percent of the country’s shipments to the US. The report warns that this tariff may cause significant short-term challenges for Pakistan’s textile sector.
According to the report, the new tariff could lead to reduced export volumes and shifted US orders to countries with lower tariffs. This shift may result in job losses and potential factory closures, particularly among small and medium-sized exporters. Although this presents difficulties, the 90-day freeze on the tariff’s implementation offers a vital opportunity for Pakistan to negotiate with the US.
ICMA identifies a comparative advantage for Pakistan despite the challenges. Although Pakistan faces a 29 percent tariff, many regional competitors are subject to even higher tariffs. Countries like China face a staggering 125 percent, while Bangladesh, Vietnam, Cambodia, and Sri Lanka face rates between 37 percent and 49 percent. However, India and Turkey benefit from lower tariffs of 26 percent and 10 percent, respectively, putting Pakistani exports at a disadvantage in the US market.
To overcome these challenges, ICMA suggests immediate diplomatic engagement with the US for tariff relief and better trade terms. There is also a call for the government to support the textile sector by reducing duties on essential materials and providing tax incentives. Additionally, the report urges diversification of export markets and products, advocating for a focus on high-value textile items like denim and fashion garments. Policymakers should remain vigilant regarding US tariff policies and explore new opportunities in markets like the Gulf, Central Asia, Africa, and Southeast Asia.