Tariffs, Textiles, and Timing: Navigating Shifts in Pakistan’s Export Landscape

As the U.S. imposes steep tariffs on Pakistani textiles, the nation’s key export sector faces significant challenges, threatening economic stability and employment.​

Pakistan’s textile industry, a cornerstone of its economy, is confronting a formidable challenge as the United States enacts substantial tariffs on its exports. These measures threaten to disrupt trade dynamics, strain economic growth, and impact employment across the nation.​

The Tariff Impact

In 2024, the U.S. collected approximately $611 million in tariffs on Pakistani goods, a significant increase from previous years. With the introduction of a 29% tariff on Pakistani textiles, experts predict a potential loss of $564 million in exports for FY 2025-26. In a worst-case scenario, losses could escalate to $2.17 billion, with demand for commodities potentially falling by 13%.​

Export Performance Amid Challenges

Despite these hurdles, Pakistan’s textile exports demonstrated resilience. In the first half of FY 2024-25, exports rose by 9.67%, reaching $9.08 billion. However, the sector’s growth is now threatened by the new tariffs, which could undermine these gains.​

Competitive Pressures

The increased tariffs place Pakistani textiles at a disadvantage compared to regional competitors like China, Vietnam, and Bangladesh, who are also major suppliers to the U.S. market. As these countries adjust their trade strategies, Pakistan may face intensified competition in other markets, further straining its export sector.​

Economic and Employment Concerns

The textile industry is a significant employer in Pakistan, providing jobs to millions. The anticipated decline in exports due to tariffs could lead to job losses and economic instability, particularly in regions heavily reliant on textile manufacturing.​

Strategic Responses

To mitigate the impact, Pakistan may need to explore alternative markets, enhance the competitiveness of its textile products, and engage in diplomatic efforts to negotiate more favorable trade terms. Investing in value-added products and diversifying export destinations could also be crucial strategies moving forward.​

As Pakistan navigates this challenging landscape, the interplay of tariffs, textiles, and timing will be critical in shaping the future of its export economy. Proactive measures and strategic planning will be essential to safeguard the industry’s contributions to the nation’s economic well-being.