Pakistan Secures Favorable Tariff in New U.S. Trade Framework

Mian Zahid Hussain, President of the Pakistan Businessmen and Intellectuals Forum and Chairman of the National Business Group Pakistan (NBG), has lauded the recently implemented U.S. reciprocal tariff system under the “America First Trade Policy.” This framework shifts from standard trade regulations to tariffs tailored for individual countries.

Pakistan has successfully negotiated a 19% reciprocal tariff on its exports to the U.S., a diplomatic achievement when viewed against India’s 25% tariff, which includes an additional 25% penalty due to oil acquisitions from Russia.

In return, Pakistan is set to eliminate its 5% levy on digital services and pursue a collaborative oil reserve venture with an American company. Mian Zahid Hussain stated, “This updated tariff structure offers a significant chance for Pakistani exporters.”

“The 19% tariff provides our industries with a competitive advantage, notably in the textile and apparel sectors, which constitute a large portion of our exports to the U.S. However, this benefit is vulnerable, and its lasting impact isn’t assured without substantial domestic structural adjustments.”

Strategy for Maximizing Benefits

Mian Zahid emphasized the necessity of a dual approach to fully leverage this opportunity. He advised that Pakistani exporters, especially those in textiles and garments, should act swiftly to capitalize on the competitive edge afforded by the 19% tariff. He highlighted the importance of prompt structural overhauls to address elevated energy costs, enhance port facilities, and broaden exports into higher-value industries such as IT and engineering.

Impact on SMEs

Mian Zahid noted that the revised U.S. de minimis exemption now mandates formal declarations and duties on the majority of shipments, which significantly affects small and medium-sized enterprises (SMEs). He underscored the need for cooperation between the government and the private sector to cultivate a business-friendly setting. Without meaningful reforms, we risk forfeiting our edge. A concerted effort focused on innovation and simplifying business operations in Pakistan is crucial.