Trump’s Tariff Decision Poses Challenge for Pakistan’s Textile Exports

Karachi: The recent imposition of a baseline 10% tariff by the United States on imported goods from all trading partners, effective April 5, 2025, is set to impact Pakistan’s textile industry significantly. With further additional taxes anticipated for 60 countries, including Pakistan, starting April 9, the potential repercussions for one of Pakistan’s key export sectors are looming.

Pakistan’s textile sector, which constitutes 18% of the country’s total exports to the United States and accounts for 25% of its overall textile exports, could face a substantial downturn. Analysts predict a decline ranging from $0.44 billion to $0.9 billion in textile exports to the U.S., representing a 2.5% to 5% reduction, based on fiscal year 2025 estimates of $17.7 billion in total textile exports. This forecast assumes Pakistan does not capitalize on displaced demand from countries facing high tariffs or diversify its export markets.

Specific textile companies, such as FEROZ 1888 Mills, Interloop Ltd, and Sapphire Fibre, with higher exposure to the U.S. market, are particularly vulnerable. FEROZ 1888 Mills derives 72% of its revenue from U.S. exports, while Interloop Ltd and Sapphire Fibre report 50% and 20%, respectively.

Interloop Ltd is expected to experience a 10% impact on its fiscal year 2026 earnings per share from a 10% reduction in U.S. exports. Combined with recent changes in gas and power tariffs, the overall negative impact on Interloop’s earnings could reach 12%.

The tariff adjustments underscore the challenges facing Pakistan’s textile sector as it navigates the implications of U.S. trade policy shifts. Industry stakeholders are urged to explore new market opportunities and strategies to mitigate potential revenue losses.