U.S. President Donald Trump unveiled a new trade plan that will impose sweeping tariffs on a range of countries, including Pakistan.
Under the new policy, Pakistan will face a 29% tariff on its goods entering the United States, a move Trump justifies by citing Pakistan’s 58% tariff on American exports. This decision is part of a broader strategy to rebalance global trade and address longstanding imbalances that, according to Trump, have disadvantaged American businesses.
Trump framed the tariff increases as a necessary step to “put America first” and combat what he described as “unfair” trade practices by other nations. “We subsidize a lot of countries and keep them going and keep them in business. Why are we doing this? I mean, at what point do we say you got to work for yourselves.”
“We are finally putting America first,” Trump added, calling trade deficits “a national emergency.”
The new tariffs, which will go into effect on April 5, 2025, include a baseline 10% levy on most countries, with higher rates imposed on nations with more substantial trade barriers, such as Pakistan.
The announcement triggered immediate global market volatility, with stock markets in Beijing and Tokyo dipping to multi-month lows. U.S. and European stock futures also pointed to significant losses, as investors sought refuge in safer assets like bonds and gold. The escalating trade tensions, particularly between the U.S. and China, have stoked fears of inflation and slower economic growth worldwide.
Impact on Pakistan’s Trade with the US
Pakistan’s export sector is expected to face significant challenges as a result of the new tariffs. The United States remains one of Pakistan’s largest trading partners, with bilateral trade valued at $7.3 billion in 2024. However, the 29% tariff will make Pakistani products significantly more expensive for U.S. consumers, particularly in sectors like textiles and clothing, which dominate Pakistan’s exports.
In 2023, Pakistan’s textile exports to the U.S. were valued at $5 billion, with key products including knitwear, cotton products, and leather accessories. While the tariff hike is expected to erode Pakistan’s competitiveness, it may still have an advantage over other Asian countries, such as Vietnam, which will face a 46% tariff, and Cambodia, which faces a steep 49% duty.
Global implications and future outlook
The new U.S. tariff regime will not only impact Pakistan but also affect numerous other countries. China, for instance, will face a 34% tariff, while India will see a 26% levy.
The European Union will also be hit with a 20% tariff, and nations like Japan, South Korea, and Malaysia will see significant tariff increases. Meanwhile, countries such as Canada and Mexico are exempt from these new measures, as they remain under existing trade frameworks.
The broader implications of Trump’s tariff policy signal the end of an era of trade liberalization that has shaped the global economic landscape for decades. As the U.S. seeks to correct trade imbalances and reduce non-tariff barriers, the world’s economic future hangs in the balance, with countries now bracing for the long-term effects of these protectionist measures.