Tariff blow

FOR an export sector already squeezed by high production costs, the additional 10pc tariff on top of the existing 29pc on Pakistan’s shipments to the US comes at the worst possible moment for the country’s textile and apparel industry. The new import tax imposed by the US trade representative late last month, after a review linked to enforcement of forced-labour prohibitions across Washington’s trading partners, risks eroding Pakistan’s competitiveness in the American market. Pakistan prohibits forced labour by law, but the US wants stricter enforcement. Textiles and apparel account for most of Pakistan’s exports to the US. Facing high energy prices, expensive financing, taxes and logistic costs, the textiles and apparel industry fears its buyers could turn to lower-cost suppliers from regional competitors. The new duty is estimated to cost the sector $564m in export revenue this fiscal year.

The new tariffs come amid growing discussion of stronger commercial ties between Islamabad and Washington. Pakistan is also increasing imports of oil and other commodities from the US, a move meant to narrow the bilateral trade gap in favour of America. But that cannot be mistaken for protection. Even the recent improvement in diplomatic relations between the two has failed to shield Pakistan’s exports from additional tariffs — that should be seen as a warning. The new duties are a reminder that diplomacy alone cannot offset hard trade policy. If Pakistan wants to increase its share in the US market on stable terms, it must show that compliance and enforcement are functioning systems. It cannot rely on goodwill alone, nor can it afford complacency at home. The immediate priority should be to reduce the cost of production through cheaper and more reliable energy, easier access to finance and improvements in logistics. That must be paired with serious enforcement of labour standards and a more proactive case before US regulators and buyers. Washington must also recognise that punitive duties on a labour-intensive economy can deepen hardship without necessarily changing supply-chain behaviour. The long-term answer is diversification. Pakistan should push beyond dependence on low-margin textile and apparel exports, move up the value chain and broaden its export markets. A stronger industrial base, not diplomatic optics, will determine whether it can sustain its presence in global trade.

Published in Dawn, August 4th, 2026

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