Trump's tariffs: ripple effect

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US President Donald Trump's nonsensical "reciprocal tariffs" and the ensuing trade war with China have devastated the global economy and threaten to bring about a global recession, or at least a widespread economic slowdown.

The tariffs have eaten into growth projections for most countries, including Pakistan. Per the IMF, Pakistan's economy will now grow at just 2.6% this year, down from the 3.2% as projected by the Fund at the start of the fiscal year.

The US is Pakistan's biggest export destination, and any significant reduction in demand for Pakistani products because of the proposed 29% tariffs could cripple entire sectors in Pakistan. Experts are also projecting significant job losses and decreased foreign exchange earnings due to the tariffs, as one knock-on effect of the taxes could be a reduction in demand for Pakistani exports in several other countries where the economies also end up taking a hit due to the tariffs.

Initially framed as a protective measure for American industries, Trump's tariffs have quickly escalated into a trade war that has strained international relations and threatened global economic stability.

China and the US are now both leaning on various countries to pick sides in this dispute, and surprisingly, several traditional US allies — feeling betrayed by Trump — have been willing to consider China's proposals. And although one of the stated aims of the tariffs was to bolster domestic production, experts have cast doubt on the possibility of significant amounts of production being onshored because manufacturing many imported goods domestically would require setting up new factories worth millions and paying workers US wages.

For comparison, even low-paid US factory workers would require salaries of about $2,500 per month, as against Pakistani workers, for instance, who often make under $200 per month.

While some countries will be able to weather out the tariffs before the inevitable implosion of the US economy forces Trump to revoke them, cash-strapped Pakistan needs urgent reforms if it is to survive.