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Pakistan Risks Underestimating Impact of New US Tariffs — Why Caution, Not Optimism, Is Urgently Needed

As the United States rolls out a new wave of punitive tariffs, experts warn that Pakistan’s response so far has been dangerously casual, lacking the urgency and strategic clarity required to safeguard national interests. Despite reassurances from policymakers, the risks tied to higher US trade barriers could deal a heavy blow to Pakistan’s fragile economy if not handled wisely.

📉 The False Hope of Minerals and Rare Earth Exports

Finance Minister Muhammad Aurangzeb recently suggested that Pakistan could balance its trade with the US by exporting minerals and rare earth metals. However, this proposal appears to be more aspirational than actionable:

Pakistan’s rare earth sector is still in its early exploration phase
Major projects like Reko Diq are years away from commercial production
Security concerns in regions like Balochistan pose serious operational challenges

As experts rightly point out, securing a mining site is one thing — building a sustainable economic ecosystem around it is an entirely different and complex task.

🚢 Importing from the US: Costly and Ineffective?

There’s talk of increasing imports of soybeans, cotton, and crude oil from the US to narrow the trade gap. But the reality is:

US goods are often more expensive compared to alternative suppliers
Higher freight and insurance costs could make imports unviable
Local consumers and industries may end up paying the price for political maneuvering

This approach addresses surface-level numbers while ignoring deeper structural problems in the bilateral trade relationship.

🛃 Persistent Non-Tariff Barriers and Regulatory Frictions

The US has long highlighted Pakistan’s non-tariff barriers in its policy papers:

Inconsistent customs valuation practices
Technical barriers to trade such as the controversial SRO 237 on bulk food imports
Regulatory mishaps like the recent GMO soybean import fiasco

These issues erode trust and make Pakistan a less attractive trading partner in Washington’s eyes.

🌐 Internet Disruptions and Digital Economy Setbacks

Another critical, often overlooked, obstacle is the frequent internet disruptions in Pakistan:

Full-scale internet blackouts have hurt US companies operating in Pakistan
Local IT firms serving US clients have also suffered heavy losses
Global tech giants like Meta and Alphabet face ongoing payment and regulatory hurdles

Adding insult to injury, a major US-based social media platform, closely linked to President Trump’s circle, remains banned in Pakistan, further straining digital ties.

🇺🇸 Pakistan’s Diminishing Leverage in a Crowded Field

It’s important to recognize:

Pakistan is a minor trading partner for the United States
Bigger economies will dominate US trade negotiations and deals
Preferential treatment is highly unlikely
Pakistan risks being sidelined, offered only token gestures after major US interests are addressed elsewhere

⚠️ The Bottom Line: Over-Optimism Could Be Dangerous

While improving US-Pakistan trade ties is possible, the path forward is full of obstacles — and requires clear-eyed realism, not unfounded optimism.

Pakistan must:

✅ Tackle non-tariff and technical barriers head-on
✅ Stabilize its digital infrastructure
✅ Rebuild trust with American businesses
✅ Approach trade negotiations with humility and strategic caution

This is not the time for symbolic solutions or delayed action. It is time for a comprehensive strategy grounded in economic realities, not wishful thinking.

📢 Stay tuned with www.dailyforex.pk for critical analysis on US-Pakistan trade relations, tariff impacts, and strategic economic developments shaping Pakistan’s future.