The International Monetary Fund (IMF) has warned that the recent reciprocal tariffs imposed by the US under President Donald Trump will negatively impact Pakistan’s exports and economic growth. The IMF’s latest report stated that while the full effect remains uncertain, the tariffs will likely reduce Pakistan’s GDP growth, with a modest reduction in FY25 and FY26 projections.
On April 2, 2025, the US raised tariffs, including a 29% tariff on Pakistani goods. Although Pakistan’s export sector is small, the US is its largest trading partner, and textiles make up the bulk of exports. The IMF also pointed out that other countries like China, India, and Bangladesh are facing similar tariff increases, which could mitigate Pakistan’s competitive disadvantage.
The IMF highlighted the broader effects of these tariffs, including potential impacts on Pakistan’s other trading partners, tighter global financial conditions, and lower remittances. However, the IMF noted that recent drops in commodity prices may help offset the impact on Pakistan’s balance of payments and import bill.
The report also pointed out rising sovereign spreads since the tariff hike and limited access to external financing in the near term. In the event of intensified outflow pressures, the IMF stressed the importance of allowing the exchange rate to adjust. The IMF forecast that inflation would see modest pressure due to lower commodity prices and weaker growth.
Finance Minister Muhammad Aurangzeb had previously mentioned that Pakistan aims to reduce these tariffs by enhancing its trade with the US and removing non-tariff barriers.