Karachi:
Pakistan, who had been considered unharmed by the war of the United States, based his perspective on the fact that the previous rates of the president of the United States, Donald Trump, had not attacked Pakistan, has now been taken by surprise by the 29% rate of the United States. This will significantly affect its export sector, particularly the textile industry already stagnant. The result will be a severe coup for exports, foreign reserves and employment, exacerbating even more the country’s economic challenges.
The country had even considered inviting Chinese factories to relocate to avoid tariffs imposed on China. However, this effort failed in the past due to a hostile business environment and political instability caused by the struggle of continuous power between politicians and the establishment.
The United States has imposed reciprocal tariffs on its commercial partners, including Pakistan, to boost national manufacturing and generate income. These rates vary from 10-48%, in addition to a 10% universal rate applied to all countries.
In 2024, US imports totaled $ 3.36 billion, reflecting an increase of 6% year -on -year (interannual), according to the commercial map. Mexico was the largest taxpayer to US imports. (15%), followed by China, Canada, Germany and Japan, with actions ranging from 5 to 14%, according to Topline Securities. On the contrary, Pakistan’s participation was only 0.16%, compared to Vietnam (4.2%), Bangladesh (0.26%), Sri Lanka (0.09%) and India (2.7%). Despite its small participation in US imports. UU., The United States remains the largest export destination of Pakistan, representing $ 6 billion annually, or 18% of Pakistan’s total exports.
The textile industry faces tariff challenges
Textiles constitute 75-80% of Pakistan’s exports to the United States, with other exported products that include leather, surgical instruments, rice, cement, steel and salt products. Pakistan textile exports compete mainly with China, India, Vietnam, Cambodia, Indonesia and Bangladesh. Tariffs imposed on textile exports vary: China (34%), Vietnam (46%), Sri Lanka (44%) and Bangladesh (37%) face higher rates than Pakistan (29%), while India benefits from a slightly lower tariff (26%).
Pakistan and India export similar textile products (product codes 61, 62, 63 and 52), which means that India has a competitive advantage due to its lower tariff rate. On the contrary, the highest tasks in Bangladesh and Vietnam provide some relief to Pakistan’s textile exports. However, with higher rates on China, Vietnam and Bangladesh, these countries can change their focus to the European market, intensifying the competition for Pakistan exports in that region.
Companies affected by the US rate
Pakistani keynotes affected textile companies affected by the tariff policies of the United States include Interloop Limited (ILP), Feroz Mills (FML), Kohinore Textile (KTML), Nishat Mills (NML) and Gul Ahmed (GATM). Outside the textile sector, companies such as Global Service Footwear (SGF), Matco Foods (MFL), Fast Cables (FCL), International Steels (ISL), International Industries (INIL), DG Khan Cement (DGKC), Power Cement (Power) and Mitchells Fruit Farm Limited (Mffl) also have the exhibition. In addition, Pak Elektron (Pael) has recently begun to export transformers to the US, according to Topline Se.
Commercial balance, export breakdown
Pakistan’s commercial balance with the United States remains in surplus. In the fiscal year24, Pakistan exported goods of $ 5.44 billion to the US. This was a slight decrease in the surplus of $ 3.72 billion of the fiscal year23 due to a 6% drop in exports and an 8% reduction in imports. Until fiscal year 2015 to date, the surplus is $ 2.51 billion, with exports of $ 4.01 billion and imports at $ 1.50 billion.
Textiles continue to dominate Pakistan’s exports to the US, representing 91.9% of total exports in the fiscal year24, worth $ 5 billion. In the first eight months of fiscal year 2015, textile exports totaled $ 3.7 billion, which increased their participation to 92.8% despite a general decrease in exports. The contribution of the food sector fell slightly 3.3% in fiscal year 200 and 3.2% in fiscal year 2015, while the steel sector remained stable with around 1%. Cement exports, although lower, increased from 0.3% in FY24 to 0.5% in FY25.
Pakistan mitigation strategies
To mitigate the impact of 29% of the United States rate on Pakistan exports, particularly in the textile sector, the country needs a strategic response driven by policies. Key strategies include negotiating reciprocal trade agreements to reduce tariffs on exports, especially textiles, and reduce US import tariffs such as raw cotton to maintain competitiveness.
