Islamabad – Prime Minister Shehbaz Sharif has established a 12-member steering committee to assess and respond to the United States’ recent imposition of reciprocal tariffs, which analysts warn could severely impact Pakistan’s export competitiveness.
The decision follows the announcement by US President Donald Trump, who has imposed sweeping tariffs on various countries, including Pakistan.
According to a notification issued by the Prime Minister’s Office (PMO) on Friday, “Prime Minister Shehbaz has been pleased to constitute a steering committee for in-depth analysis and policy responses to the recently announced US Reciprocal Tariffs.”
Composition of the Committee
The committee includes key officials such as the Finance Minister, Commerce Minister, Petroleum Minister, Special Assistant on Industries, Federal Board of Revenue Chairman, Foreign Affairs Secretary, Pakistan’s Ambassador to the US Rizwan Saeed Sheikh, Ambassador to the World Trade Organization (WTO) Ali Sarfaraz Hussain, former WTO envoy Dr. Manzoor Ahmad, Ijaz Nabi, Minister of Trade and Investment in Washington DC, and the Secretary of Commerce. The committee has the authority to appoint additional members as needed.
Impact of US Tariffs on Pakistan
President Trump has implemented a flat 10% tariff on all imports, with an additional 29% tariff on Pakistani goods, bringing the total tariff to 39%. Trump justified the move by stating, “Pakistan has been charging us a 58% tariff on our goods. Hence, we are imposing a 29% tariff on their products.”
The tariff will be implemented in two phases: a 10% baseline tariff from April 5, 2025, and an additional 29% reciprocal tariff from April 9, 2025. These measures effectively revoke Pakistan’s trade status under the Generalised System of Preferences (GSP), which had previously allowed for reduced tariffs on certain exports, typically between 4-5%.
Committee’s Role and Terms of Reference
The steering committee will guide and oversee the working group on US reciprocal tariffs, review recommendations, and engage in negotiations with the US as required. Additionally, the committee will brief Prime Minister Shehbaz regularly and may assign further responsibilities as deemed necessary. The Ministry of Commerce Division will provide administrative support.
Economic Ramifications
The US is Pakistan’s largest single-country export market, accounting for approximately $6 billion in annual exports, mainly textiles. The increased tariffs are expected to elevate costs and reduce competitiveness, particularly against lower-tariff nations such as India and Turkey. A Commerce Ministry report suggests that this move could lead to job losses in export-driven sectors, a wider trade deficit, and potential price increases in domestic markets.
Some industries, however, may remain exempt. Certain goods—including copper, pharmaceuticals, semiconductors, lumber, gold, and energy—will not face the additional 29% tariff, though they may still be subject to the 10% baseline tariff. The textile sector, which is heavily reliant on US imports of cotton, may be able to mitigate some costs by sourcing more materials from the US to qualify for exemptions.
Comparative Trade Position
Despite the tariff hikes, Pakistan retains a cost advantage over heavily tariffed countries like Vietnam (46%), Indonesia (49%), Cambodia (49%), China (54%), and Bangladesh (37%). However, it faces a disadvantage compared to India (26%), Turkey (10%), and Jordan, Egypt, and Central America (23%). These shifts may force Pakistan to explore alternative export markets or renegotiate trade terms with Washington.
The Path Forward
The Trump administration’s trade policy aims to reduce the US trade deficit—$918.4 billion in 2024—while promoting domestic manufacturing. Pakistan’s trade surplus with the US, which stood at $3 billion in 2024, is relatively small compared to larger economies like China. However, the impact of these tariffs will largely depend on Pakistan’s response and potential trade negotiations.
Prime Minister Shehbaz has tasked the steering committee with devising a robust strategy to mitigate economic fallout and secure fair trade agreements. The government may consider reciprocal tariff adjustments or trade diversification to counteract the financial strain caused by these sweeping US tariffs. As the situation evolves, Pakistan will need a decisive policy approach to sustain its export sector and economic stability.