President Donald Trump’s trade policies have disrupted decades of economic norms, raising questions about the future of free trade. His tariffs on major trading partners challenge the principles established by the General Agreement on Tariffs and Trade (GATT) and the World Trade Organization (WTO). These changes may present a unique chance for countries like Pakistan to rethink their approach to industrial policy.
Historically, Pakistan faced pressure to lower trade barriers, which hindered its industrial growth. By complying with WTO demands, Pakistan opened its markets to global competition. This influx of low-cost goods from skilled manufacturers harmed local businesses that were still developing. As a result, many manufacturers struggled to survive, limiting investment in the industry.
Interestingly, the experience curve shows that companies—and countries—gain a competitive edge through production experience. Japan’s successful post-war industrialization relied on high tariffs, protecting local manufacturers from foreign competition. This approach allowed firms to build experience and quality before entering global markets.
With the potential decline of the WTO, Pakistan could reenact protective tariffs to support emerging industries. By doing so, it could encourage investment in local manufacturing without the threat of seasoned international competitors. If Pakistan takes this opportunity, it could pave the way to becoming an industrial powerhouse rather than remaining a developing nation.