Karachi, April 10, 2025 – The Institute of Cost and Management Accountants of Pakistan (ICMA) has released a comprehensive report analyzing the implications of the newly imposed 29% reciprocal tariff by the United States on Pakistan’s exports, with a particular focus on the textile industry.
The report, prepared by ICMA’s Research and Publications Department, provides detailed insights into the potential economic consequences and strategic responses available to Pakistan.
According to ICMA, the U.S. tariff affects a broad spectrum of goods, but it poses a particularly serious threat to Pakistan’s textile sector, which accounts for over 70% of the country’s exports to the U.S. market. The report warns that the tariff may lead to significant short-term disruptions, including declining export volumes, relocation of orders to lower-tariff countries, and rising unemployment in textile hubs across Pakistan. The increased cost burden could weaken Pakistan’s competitiveness, especially among small and medium-sized exporters.
However, ICMA notes that the 90-day suspension on tariff enforcement offers a crucial window for Pakistan to engage diplomatically with U.S. officials. This period must be used strategically to negotiate either a rollback or preferential trade access for key Pakistan-origin goods. Finance Minister Muhammad Aurangzeb’s recent announcement regarding an upcoming trade delegation to the United States reflects the urgency ICMA has emphasized.
Interestingly, while Pakistan faces a 29% tariff, several regional competitors have been hit even harder—China (125%), Vietnam (46%), Cambodia (49%), and Sri Lanka (44%). Conversely, India and Turkey enjoy relatively lower tariffs of 26% and 10% respectively, placing Pakistan at a comparative disadvantage. ICMA suggests that this disparity calls for a recalibration of trade strategy and diplomatic efforts to level the playing field.
To mitigate the impact, ICMA recommends a comprehensive support package for the textile sector, including reductions in duties on raw materials like cotton yarn and the introduction of targeted tax incentives. Furthermore, the institute encourages Pakistan to invest in value-added textile segments such as denim, knitwear, and fashion apparel, where the country already has a strong global reputation.
ICMA also urges diversification of Pakistan’s export markets by exploring new regions such as the Gulf, Africa, and Central Asia. Lastly, it advises policymakers to reassess tariffs on U.S. imports as a potential negotiation tool and monitor evolving global trade dynamics to ensure proactive responses.