The Potential Impact of US Tariff Policies on Pakistani Exports to the US

This paper assesses the potential repercussions of US tariff policies on Pakistan's exports to the US. The imposition of a 19-percent tariff would result in an equivalent increase in costs for Pakistani exporters. Assuming this increase is passed entirely to end consumers and using long-run price elasticity estimates from Pakistan's export demand function, our analysis indicates that aggregate exports could decline by USD 0.40 billion or 7.6 percent in 2025 alone. Cumulative losses over five years could reach USD 2.11 billion. A sectoral analysis reveals that the textile and manufacturing sectors are particularly vulnerable, with textile exports potentially falling by USD 0.33 billion in 2025 and five-year cumulative losses of USD 1.74 billion. These findings underscore the need for a comprehensive mitigation strategy focused on enhancing competitiveness, diversifying exports, investing in renewable energy, and strengthening diplomatic and trade relations to cushion the economy against adverse tariff shocks.