IMPACT OF US TARIFFS ON PAKISTAN'S SINKING ECONOMY

  




Pakistan's economy has been on the brink of default since 2021. It has also experienced such a downfall during 1977, 1999, 2008, and then again in 2022. The increasing inflation and the overwhelming market crash during and after Imran khan's government is an explicit image of its sinking economy.

Back in 2022, Pakistan was going towards default. The country was depleted of resources, and it sought its tenth IMF bailout. In 2024, Pakistan exported 5.3 billion products to get out of bankruptcy, and it succeeded somehow. However, the twist in this account is the tariff rate, which was 17 percent at that time. Now, on the recent "American Liberation Day", Trump announced a 29 percent tariff on Pakistan's current exports

The recent increase in tariffs on Pakistani exports up to 29 percent has put it in hot water. Trump's economic and foreign policy is an apple of discord for Pakistan. Khurram Husain has stated in dawn that America is no longer reliable, as about 2.9 million of the current exports are. Due to these tariffs, 5 percent of the Pakistani market got crushed. For international trade. This tariff will highly affect the revenue generation and employment in Pakistan. Another article in Dawn also debunked that the influential industries of Pakistan, Nishat Mills and Interloof, will have to deplete 500,000 jobs due to the tariff increase. It can be clearly imagined how much it will degrade employment and increase the unemployment rate. This will eventually leave us on the brink of downfall.

Another perspective is that Pakistan still has the opportunity to overcome the scourge of Trump's tariff war.PIDE (Pakistan Institute of Development) report stated that Pakistan is still better than its neighboring countries and is less affected. China has a tariff of 145 percent, and India has a tariff of 65 percent. Pakistan still has the golden opportunity to negotiate with Trump and safeguard its economy from downfall. Although the report has stated that Pakistan has to decrease the tariffs on American goods, successful negotiations will be a big step in the future stability of the country. This step will certainly help in revenue generation as a tariff of 1.4 billion will no more to paid. Apart from it, successful negotiations will also increase the bilateral trade between the two countries, as argued by The Diplomat.

The way forward is warm relations between the two countries, which can only be achieved through settling all the tensions between the US and Pakistan. Evidence of this account is the indirect talks between Iran and the US. Although the relations between the countries are cold, the talks between the two countries reduced the tariff rate on Iran. The diplomat also argued that America is intended to negotiate with Pakistan because of its geostrategic location.

As Trump's administration is very interested in the minerals of Pakistan after the lithium deal between China and Afghanistan, we can have a mineral deal with the US based on mutual interest. This will result in an abundance of dollars and will result in a huge economic boost. In this way, we can develop more quickly than our neighboring countries.

If negotiations are denied situation will be the same as between the US and Ukraine. As Trump’s new foreign policy on Ukraine has deteriorated the situation in Ukraine. Trump has asked Ukraine to give up its 50 percent reserves, or the tariff on Ukrainian exports will be increased. The article in The Guardian urged that Trump is so confident about his tariff war because the whole world trade is in dollars, and this confidence will cost much for developing nations. So the way to protect ourselves from this neo-colonialism is going smoothly and in parallel with America.

Some policies are also to be implemented to make our country safe from such hostile neo-colonialism. It is time to be united and settle all the internal disputes. Any type of confrontation should be avoided because Noam Chomsky argues that any resistance to Trump's economic policy will result in the downfall of that country’s economy. Evidence of this account is the percentage of tariffs on China and Iran. Apart from it, direct talks and bilateral ties will play a significant role in making Trump’s administration friendly towards us. This can be done by new economic treaties and visits by our Prime Minister. Meetings between both countries' premiers will certainly be helpful in this regard.

In conclusion, free trade is very necessary with Trump’s administration to protect Pakistan’s economy from downfall. If our politicians will still beat around the bush, then it would be useless to cry over spilled milk. We have to react accordingly, or we will have to face the dire consequences of our blindness. Let’s come together, be united, and take the curtains of luxury from our eyes and save our country from falling prey to Trump’s new tariffs and trade war.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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