US President Donald Trump has been discussing the imposition of higher tariff rates on trade with different countries regarding imports to and exports from the USA, thereby shaking his country’s trade relations with various nations around the globe in a rather hush-hush manner.
According to information gathered from economic experts, the prevalent global trade climate is likely to spare Pakistan and offer a unique opportunity, benefiting it to some extent. The intensifying ongoing US tariff war under the renewed economic policies of President Donald Trump has marked a significant shift in the international trade landscape. Most of the international community is grappling with various concerns over potential economic fallout. The evolving situation has not only increased downward risks but also created opportunities for Pakistan in terms of exports.
US President Donald Trump has recently hinted more than once at boosting trade relations with Pakistan.
Pakistan ranks 13th in its trade surplus with the USA. Pakistan’s exports to the USA constitute only 17 per cent of its total exports to the world as a whole. The country is in the process of shifting its emphasis on trade and investment rather than aid, as envisioned by the incumbent federal government of Prime Minister Shehbaz Sharif. Pakistan is a major trading partner of the European Union (EU), China, and other Middle Eastern and Far Eastern countries, making it possible for its trade to remain unaffected by US actions, allowing it to maintain trade ties while larger economies around the globe face varying pressures. Pakistan’s lower reciprocal tariffs make it a more accessible market for the USA and strengthen its case for preferential treatment. Although Pakistan has imposed a lower trade-weighted average tariff on the import of US goods, at 7.3 per cent compared to US tariffs on Pakistan’s exports at 9.9 per cent, the formula adopted by the US has resulted in an additional 30 per cent tariff on Pakistan. Pakistan’s rate of 30 per cent stands out as lower than several competitors, although it is close to India’s 27 per cent. The comparatively open market profile in terms of trade-weighted average tariffs strengthens Pakistan’s case for preferential treatment and improved access to the US market, positioning it as a reasonably open trading partner.
It is worth mentioning that US President Donald Trump has recently hinted more than once at boosting trade relations with Pakistan. In pursuit of this, US Secretary of State Marco Rubio recently telephoned Prime Minister Shehbaz Sharif and discussed Pak-US relations at some length, particularly regarding enhancing trade relations between the two countries. The Prime Minister agreed to continue working closely to strengthen bilateral relations, particularly by enhancing trade between the two countries. In furtherance of these welcome developments, a Pakistani delegation has already visited Washington and held useful and productive discussions with relevant US authorities. These developments bode well for Pak-US trade relations.
Cotton trade forms the backbone of US-Pakistan textile cooperation. Pakistan is one of the largest importers of US cotton, which is a vital input for the country’s top export sector, textiles and apparel. During FY 2024, Pakistan imported over US$700 million worth of raw cotton, the largest item in imports from the US. Experts expect this number to increase further in the coming months. By sourcing high-quality cotton from the US and exporting value-added finished goods in return, Pakistan has established a mutually beneficial trade cycle. This model has not only boosted industrial competitiveness but has also strengthened long-term access to the US market.
The federal government is currently consulting with the private sector to devise policies that will increase cotton imports from the US, solidifying Pakistan’s role as a reliable textile supplier and further anchoring bilateral trade. Pakistan is also considering a proposal to import soybean and beef products from the US, which will hopefully enhance its trade with one of the largest markets in the world.
In summary, trade diversions from China and other major US partners will create export opportunities for Pakistan. The best opportunities are available in products that the US has been importing in large volumes from high-tariff countries, where Pakistan already has some export presence. Key categories include textiles and apparel, where Pakistan could expand its offerings in cotton trousers, knit shirts, and denims, capitalising on its strong textile base. Declining oil prices in the international market also provide breathing room for Pakistan’s economy, which is on an upward trajectory in a positive manner, as per the forecasts.
The writer is a Lahore-based freelance journalist, columnist and retired Deputy Controller (News), Radio Pakistan, Islamabad and can be reached at [email protected]