U.S. Tariff Framework Spurs Call for Reforms in Pakistan

Karachi: Mian Zahid Hussain, President of the Pakistan Businessmen and Intellectuals Forum and Chairman of the National Business Group Pakistan, has hailed a new U.S. reciprocal tariff framework as a major opportunity for Pakistan’s export sector but warned that the benefits could be short-lived without urgent domestic reforms.

The recently introduced framework under the “America First Trade Policy” departs from a uniform set of trade rules to impose country-specific tariffs. Under this new system, Pakistan has been accorded a 19% reciprocal tariff on its exports to the United States. This is seen as a diplomatic success, especially when compared to India’s 25% tariff, which includes an additional penalty for purchasing Russian oil. In return, Pakistan has agreed to eliminate its 5% digital services tax and collaborate on a joint oil reserve project with an American firm.

“This new tariff framework presents a crucial opportunity for Pakistani exporters,” said Mian Zahid Hussain. “The 19% tariff gives our businesses a competitive edge, particularly in the textile and apparel sectors, which comprise the bulk of our shipments to the U.S. However, this advantage is fragile and its long-term benefits are not guaranteed without significant structural reforms at home.”

Hussain emphasized the necessity of a two-pronged strategy to fully exploit this opportunity. He urged Pakistani exporters, especially those in the textile and apparel industries, to swiftly utilize the competitive advantage provided by the 19% tariff. He underscored the importance of addressing high energy costs, enhancing port infrastructure, and diversifying exports into high-value sectors like IT and engineering.

He also pointed to the updated U.S. de minimis exemption that now mandates formal declarations and duties on most shipments, significantly affecting small and medium-sized enterprises (SMEs) in Pakistan.

Hussain stressed the need for collaboration between the government and the private sector to create a competitive business environment. “Without substantial reforms, we risk losing our advantage. A unified focus on innovation and making business easier in Pakistan is essential,” he added.