US-China trade tensions create opening for Pakistani exporters to expand market share

It seems like the evolving U.S. trade policies under President Trump are creating both challenges and potential opportunities for Pakistan. While Pakistan’s exports to the U.S. remain relatively small compared to global trade giants like China, the country still enjoys a $3.7 billion trade surplus with the U.S., which could draw attention if Washington intensifies its global “trade balance” agenda.

Key Takeaways:

1. Limited Immediate Impact but Long-Term Uncertainty

   • Unlike China or the EU, Pakistan hasn’t been a major target of U.S. trade restrictions.

   • However, the addition of Pakistani firms to the U.S. export control list for alleged involvement in nuclear programs signals potential future economic pressures.

2. Potential Export Gains Amid China’s Trade Woes

   • If U.S. tariffs on Chinese goods drive up prices, Pakistan could fill the gap with competitive exports.

   • However, Pakistan’s lack of proactive trade strategy and over-reliance on China as a trade partner could limit these opportunities.

3. Trade Deficit with China is Rising Rapidly

   • Pakistan’s imports from China surged by 39% in FY24, reaching $13.5 billion.

   • The trade deficit with China is now $10.8 billion, raising concerns about Pakistan’s economic dependence on Beijing.

4. Lack of Strategic Planning by Government & Exporters

   • No formal meetings or strategies are in place to address possible U.S. tariffs.

   • If Washington demands Pakistan to buy more U.S. goods, it could repeat past scenarios where Pakistan had to import unwanted products like wheat in the 1990s instead of receiving its F-16 payments.

5. U.S. Visa Restrictions & Diplomatic Strains

   • The reported placement of Pakistan in a lower visa category hints at worsening diplomatic relations.

   • Recent incidents involving Pakistani diplomats being denied entry into the U.S. further fuel concerns.

What Should Pakistan Do?

• Diversify Trade Markets beyond just China and the U.S.

• Negotiate Favorable Trade Deals to expand exports in high-demand sectors.

• Boost Domestic Production & Competitiveness to reduce reliance on imports.

• Engage Diplomatically with Washington to prevent economic and diplomatic fallout.

The “War of Tariffs” is reshaping global trade, and Pakistan needs a clear, proactive strategy to secure its economic interests before Washington’s policies shift further.