US Tariffs Can Cost Pakistan $4.2B in 5 Years: 6 Alarming Impacts

US tariffs can cost Pakistan $4.2 billion in 5 years, a staggering blow to an economy already navigating global trade turbulence. On April 9, 2025, the United States rolled out a 39% tariff on Pakistani imports, part of President Donald Trump’s aggressive reciprocal trade policy. According to a policy note from the Lahore School of Economics (LSE), this could slash Pakistan’s export revenue by $0.8 billion in 2024 alone, with losses ballooning to $4.22 billion over five years if American consumers bear the full brunt. For a nation where exports fuel growth, this tariff hike is a wake-up call. Let’s dive into what this means for Pakistan, its industries, and its people.

Table of Contents

1. The New US Tariffs: What’s Happening?
2. How US Tariffs Can Cost Pakistan $4.2B in 5 Years
3. Pakistan’s Textile Industry Takes the Hardest Hit
4. Economic Ripple Effects: Jobs and Growth at Risk
5. Opportunities Amid the Chaos: Can Pakistan Pivot?
6. What’s Next for Pakistan’s Trade Strategy?
7. Conclusion

The New US Tariffs: What’s Happening?

US tariffs can cost Pakistan $4.2 billion in 5 years, but how did we get here? On April 5, 2025, Trump imposed a baseline 10% tariff on all US imports, followed by steeper reciprocal tariffs targeting over 90 countries. Pakistan faces a 39% rate—reflecting the 58% tariff it levies on American goods—effective April 9. This policy, dubbed “Liberation Day” by Trump, aims to shrink the US trade deficit and boost domestic manufacturing. For Pakistan, a key US trading partner with $5.1 billion in exports last year, the stakes are high.

The US justifies this by pointing to Pakistan’s trade surplus ($3 billion in 2024) and its protective tariffs. But the fallout could be brutal. The LSE warns that if these tariffs stick, Pakistan’s export-driven economy could face a multi-year slump, reshaping its global trade position.

How US Tariffs Can Cost Pakistan $4.2B in 5 Years

US tariffs can cost Pakistan $4.2 billion in 5 years, and the math is sobering. The LSE estimates a $0.8 billion drop in export revenue for 2024 if US consumers absorb the full 39% tariff. Over five years, that compounds to $4.22 billion, assuming no relief or adaptation. If Pakistani exporters offset some costs—say, passing only 29% or 19% to buyers—losses could dip to $0.6 billion or $0.4 billion in 2024, respectively. Still, the five-year tally remains daunting.

This isn’t just about tariffs. A global trade war could slow foreign demand, cutting Pakistan’s exports by another $0.29 billion to $0.49 billion over five years, per LSE projections. Combined, these factors paint a grim picture for a nation reliant on trade for economic stability.

Pakistan’s Textile Industry Takes the Hardest Hit

Textiles, the backbone of Pakistan’s exports, face the brunt. In 2024, textiles made up 55% of the $5.1 billion shipped to the US—think knit apparel, home textiles, and cotton goods. A 39% tariff jacks up prices, risking a $0.66 billion loss in textile exports this year alone, with a five-year hit of $3.48 billion if unmitigated. Companies like Nishat Mills and Gul Ahmed could see orders dry up as US buyers turn to cheaper alternatives.

Competitors like Bangladesh (37% tariff) and Vietnam (46%) face higher rates, giving Pakistan a slight edge. But India, at 26%, could outmaneuver Pakistan in this tariff war, especially in apparel. The stakes are high—textiles employ 40% of Pakistan’s industrial workforce, and a downturn threatens livelihoods.

Economic Ripple Effects: Jobs and Growth at Risk

US tariffs can cost Pakistan $4.2 billion in 5 years, but the damage goes beyond dollars. Exports drive GDP, and a $4.2 billion loss could shave growth by percentage points. The textile sector, a major employer, might cut jobs or freeze hiring, hitting women workers hardest—they dominate this labor force. A wider trade deficit could strain foreign reserves, already a pressure point for Pakistan.

Inflation’s another worry. If exports falter and imports (like energy) stay costly, consumer prices could climb. The State Bank of Pakistan might delay rate cuts, slowing recovery. This tariff shock tests an economy still stabilizing from past IMF bailouts and exchange rate woes.

Opportunities Amid the Chaos: Can Pakistan Pivot?

It’s not all doom. US tariffs can cost Pakistan $4.2 billion in 5 years, but they also open doors. Higher tariffs on rivals like China (54%) and Vietnam could divert US buyers to Pakistan, especially in textiles. A Commerce Ministry official estimates a $250 million export boost if Pakistan markets aggressively—think meat, corn, and sports goods.

Lower global commodity prices, spurred by a trade war, could cut Pakistan’s $1.5-$2 billion annual oil import bill, easing its trade deficit. Long-term, importing US LNG could balance the $3 billion surplus and soften tariff tensions. Pakistan’s challenge? Act fast to seize these silver linings.

What’s Next for Pakistan’s Trade Strategy?

Pakistan’s response is critical. The government plans talks with the US Trade Representative to negotiate relief, offering concessions like lower duties on US goods. Diversifying exports—beyond textiles, into IT or high-value manufacturing—is a must. New markets like Africa or the Gulf could offset US losses.

Analysts urge energy cost cuts to keep exporters competitive. A “Global Trade Branding Initiative,” as suggested by CASS, could pitch Pakistan as a reliable supplier at trade expos. The clock’s ticking—adapting now could turn a $4.2 billion loss into a growth catalyst. For more on global trade shifts, see this analysis from Reuters.

Conclusion

US tariffs can cost Pakistan $4.2 billion in 5 years, a gut punch to its export economy. Textiles will suffer most, jobs hang in the balance, and growth could stall. Yet, amidst the chaos, Pakistan has a shot at resilience—outpacing rivals, cutting import costs, and rethinking trade ties. The next few months will reveal if Pakistan can turn this tariff storm into an opportunity. What’s your take—can Pakistan bounce back? Drop your thoughts below!