The Government of Pakistan has initiated meetings with key stakeholders, primarily representatives of the textiles sector, to analyze the impact of Trump’s tariffs on trade, the potential to exploit regional opportunities, and possible negotiations with the U.S., including by offering a reduction in duties on key imports such as soya and cotton.
Last week, the U.S. president announced that he had imposed a baseline tariff of 10% on all goods imported by the U.S. From April 9, countries with large trade deficits with the U.S.— such as Pakistan, Bangladesh, Vietnam, and China—face additional taxes. Of these, per Trump officials, over 50 countries have approached Washington to negotiate a reduction in tariffs.
Shugafta Irshad, research analyst at JS Global, noted that the U.S. remains the world’s largest importer of cotton products, securing 3.3 million tons of apparel, home textiles, etc. in 2024. After China (20%) and India (16%), Pakistan is third highest cotton product supplier to the U.S. with a 14% share. India’s growing share is linked to earlier restrictions imposed on China, as well as side-by-side vertical integration in the textile product supply chain.
“We also highlight that Pakistan has recently emerged as the largest importer of U.S. raw cotton given drop in U.S. cotton prices and decline in domestic cotton output,” said Irshad. “Thus, any negotiations with the U.S. resulting in reduced tariffs on raw cotton from the U.S. would be beneficial for both the U.S. as well as Pakistani textile exporters,” she added.
Implications for Pakistan’s Textile Sector
The textile sector accounts for 54% of Pakistan’s total exports, while 18% of that total is sent to the U.S. Textile exports to the U.S. account for 25% of the country’s total exports.
Following Trump’s recently announced imposition of 29% tariff on Pakistani goods, fears are mounting of the sector losing market share after losing ground to states such as India, which are facing lower tariffs. At 29%, Pakistan’s tariff is still lower than China (54%), Vietnam (44%) and Bangladesh (37%). However, it is higher than India (26%) and Turkey (10%).
A 10-20% cut in Pakistan’s textile exports to the U.S. due to the tariff could see the country loss $0.44-0.9 billion in revenue—assuming the country takes no advantage of displaced demand from high tariff countries and does not explore other export markets. Recently, U.S. importers had started shifting orders away from Bangladesh due to political unrest and rising labor cost, and China, due to restrictions by the U.S. This presents Pakistan with an opportunity to expand its share of exports for value-added textile products to America.
“We highlight, Pakistan may face additional pressure on exports to E.U. from U.S. trading partners, which will now be aggressively looking out for alternate markets,” said JS Global’s Irshad.
The commodities brokerage service stressed that if Pakistan desires to secure the share of U.S. imports lost to high-tariff trading partners, it must achieve cost economies—cheaper raw cotton from Pakistan or imported from the U.S.—and vertical integration of operations from semi-finished products to ready-made garments as well as achieving efficiency in fuel and power cost.