Pakistan emphasises 'mutually beneficial' resolution to US tariffs

• US President Trump announces 90-day pause on tariffs.
• Earlier, he imposed 29% tariffs on Pakistani exports to US.
• Global UGRAD played key role in promoting academic linkages: FO.
  

Foreign Office Spokesperson Shafqat Ali Khan on Thursday said that Pakistan was following the issue of tariff imposition by the US and the recent suspension on most of the countries.

Addressing the weekly press briefing, the FO spokesperson said that considering the interconnected nature of global trade, the tariff imposition could have a far-reaching impact and emphasised a mutually beneficial resolution of the matter.

Last week, US President Donald Trump further escalated the trade war by announcing a baseline 10% tariff on all imports, higher duties on key trading partners of the United States, and a 29% tariff on Pakistan.

Following days of global market turmoil, Trump on Wednesday said he would pause many of his new tariffs for 90 days, even as he raised them further on imports from China.

"I have authorised a 90-day PAUSE" on higher tariffs that took effect on Wednesday, Trump said on his Truth Social network, saying he took the decision after more than 75 countries had reached out to negotiate and did not retaliate against the United States.

Only a flat rate of 10% tariffs on all countries that took effect on Saturday will remain in place. This marked a stunning reverse from often punishing levies that hit even many of the closest US allies.

According to a report by Islamabad-based think tank Tabadlab, Pakistan could face an estimated export loss of $564 million in fiscal year 2025-26 as a result of steep new tariffs imposed by the US under President Donald Trump’s latest trade policy shift.

Pakistan will send a delegation to the US in the coming weeks to negotiate new tariffs, the government said in an announcement before Donald Trump announced a delay to the measures, reported AFP.

Fears of the fallout remain, and if things do not work out, the textile sector, which comprises more than half of exports to the US, is expected to bear the brunt of the impact. With US consumers highly price-sensitive, Tabadlab projects demand could decline by at least 13% by FY2025-26. If Pakistan loses both market share and demand, export losses could balloon to $2.17 billion in a worst-case scenario.

“These tariffs may erase recent gains in exports across key sectors, undermining current account stability and compounding an already fragile economic outlook,” the report warned.

Pakistan’s overall exports to the US currently total about $6.3 billion annually. The new duties pose a significant threat at a time when the country is attempting to shore up its external account and stabilise economic growth.

Data from Pakistan’s trade with the US shows imports from the US stood at $1.87 billion in 2024, accounting for just 4.0% of Pakistan’s total imports. The US share in Pakistan’s top five import segments was even lower, at 1.4 per cent, indicating minimal reliance on American goods.

Top US exports to Pakistan include pharmaceuticals ($147 million), machinery ($143 million), and iron and steel ($190 million). Yet tariff revenue generated from these imports remains modest — just $85 million — with an average effective tariff rate of 4.5%, significantly lower than Pakistan’s overall import tariff average of 8.0%.

According to the Trump administration’s calculations, Pakistan charges 58% tariffs on goods from the US.

The administration used what economists call a misleading formula to calculate the rate of tariffs (dividing the US trade deficit with a country from total US imports to that country).

Pakistan’s zero tariff on US cotton and limited protection for sectors like scrap metal or medical equipment means there is little immediate scope for reciprocal tariff leverage in negotiations.

Global Undergraduate Exchange Programme

Regarding the discontinuation of the Global Undergraduate Exchange Programme (Global UGRAD) for Pakistani students, the FO spokesperson said that the decision marked the end of a 15-year engagement that played a pivotal role in promoting academic and cultural linkages besides strengthening bilateral ties focusing on education, science and technology and people-to-people contacts.

To a question, the FO spokesperson said that the ongoing repatriation of illegal foreign nationals from Pakistan was under a legal framework and the individuals were allowed to return to Pakistan after obtaining visa.

He said that Pakistan had been more generous than any other country in the world to host the Afghan nationals and reiterated the government’s policy to ensure the dignified return of those staying illegally.