
What will be the impact of US Tariff on Pakistan?
On Thursday, Donald Trump announced tariffs on exporting their products to the US, and more than 180 countries faced tariffs announced by the US president. There is a big opportunity for Pakistan to capture the share of countries that are suffering from higher tariffs than Pakistan, while India only has the advantage of 3% compared to Pakistan.
The entire global market is in a panic due to US President Donald Trump's announced tariffs against all US trade partners and different sets of tariffs. First, a 10% tariff for all countries, including Pakistan and India. Moreover, the announced tariff for countries which have different figures, would be applied. Therefore, Pakistan is facing an total 39% tariff, and India is facing a 36% tariff, while Bangladesh and Sri Lanka are facing much higher tariffs than Pakistan and India.
This is the best opportunity for Pakistan to shift its market and increase cross-border trade, assess the impact of its competitors, and take advantage of the situation. Moreover, Bangladesh is the real competitor of Pakistan because both nations' main export is textiles, and Bangladesh's entire export is based on textiles. Moreover, 90% of the Bangladesh's exports are textiles. However, now Pakistan has the advantage of capturing the market in the US, where Bangladeshi products could become expensive.
Additionally, the PM announced electricity rate cuts by 13% for industries, which will help further to reduce the price of Pakistani products in the US and mitigate the loss which would occur due to US tariffs on Pakistan's exports. However, in the long run, Pakistan must focus on reforms, better productivity, alternative exporting avenues, and increasing IT exports.