Pakistan is expected to incur a loss of approximately $1 billion following the imposition of a 29% tariff by the United States on Pakistani goods, according to a report released by Pakistan's Ministry of Commerce.
Despite this tariff, the US is projected to continue facing a trade deficit of $2 billion with Pakistan.
The document outlines the potential impact of the new tariff on the trade relationship between the two countries. It notes that trade volume between Pakistan and the US reached $7.3 billion in the last fiscal year. The US exported $2.1 billion worth of goods to Pakistan, reflecting a 4.4% increase from the previous year.
On the other hand, Pakistan’s exports to the US in 2024 totaled $5.1 billion, marking a 4.9% increase from 2023. However, the widening trade imbalance between the two countries is notable, with the US trade deficit with Pakistan growing by 5.2% to reach $3 billion.
The textile and apparel sector continues to be Pakistan's largest export to the US, accounting for 55% of total exports. The information technology sector also saw strong growth, with exports to the US exceeding $1 billion in 2024.
The document warns that the 29% tariff will significantly impact Pakistan's textile exports, potentially making them more expensive and reducing demand.
Furthermore, the tariff is expected to exacerbate Pakistan’s trade deficit with the US and may create challenges in finding alternative markets for products such as rice and textiles. Pakistan’s overall exports could decrease by 10-15% as a result of the new tariff.
In response to these potential challenges, the Ministry of Commerce has emphasized the urgent need for trade negotiations between Pakistan and the US to mitigate the negative effects of the tariff and work towards a resolution.
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