The US market’s new barriers expose deep fragilities in Pakistan’s export model.
Pakistan’s export sector is heading into a sharper downturn after a new report by the SAARC Chamber of Commerce & Industry (SCCI) and the South Asian Federation of Accountants (SAFA) warned that the United States’ 19% reciprocal tariff is already eroding competitiveness and choking orders—especially in textiles and apparel.
Although Washington cut the tariff from an initial 29% to 19% in August 2025, the relief has been limited. The report estimates that the new duties have raised the landed cost of Pakistani textiles by up to 18%, triggering a 20–30% drop in export volumes. Think tanks cited in the study warn that export revenues could fall by 20–25% if the tariff persists, with knock-on effects for employment, foreign reserves and the rupee.
The timing is particularly damaging. The US absorbs highest percentage of Pakistan’s textile and apparel exports, leaving the sector acutely exposed. Exporters report spinning and weaving units shutting down as shrinking orders collide with high domestic energy costs. Economists caution that the full impact will materialise in early 2026, when the next cycle of US orders reflects the higher tariffs.
Some analysts note that Pakistan now faces lower US tariffs than India or Bangladesh, preserving a narrow relative advantage. But most agree this offers little protection without a more competitive cost base. As one exporter put it, tariffs are an external shock; energy prices, logistics bottlenecks and policy inconsistency are self-inflicted wounds.
The SCCI-SAFA report urges diversification—towards regional trade, local-currency settlement and new markets in ASEAN, the Middle East and Africa. Yet the deeper message is starker: without fixing domestic inefficiencies, Pakistan’s largest export industry will remain dangerously vulnerable to every shift in global trade policy.
