Qian Geng, Jiaqi Zhang & Yuxin Jiang
On 3 April 2025, the US announced the imposition of 10-50% tariffs on 185 countries and administrative regions across the globe to put pressure on countries through minimum benchmark tariffs and reciprocal tariffs policy. The US’s indiscriminate imposition of tariffs will undoubtedly disrupt the international market. With 29 percent tariffs imposed on Pakistan, Profit by Pakistan Today has predicted that Pakistan will lose $564 million in exports in FY 2025-2026 due to the new US tariff policy, and in the worst-case scenario, the loss could reach $2.17 billion, and demand for commodities could fall by 13 percent.
Pakistan is the world’s 4th largest producer of cotton, 3rd largest consumer of cotton, 2nd largest producer of cloth, and 3rd largest producer of cotton yarn, and its textile exports account for about 5 percent of the total global textile trade and, at its peak, 60 percent of Pakistan’s total national exports. The textile industry is vital for Pakistan’s GDP growth and employment, acting as the lifeblood of the economy and an essential industry.
In 2024, Pakistan’s total annual exports to the United States were about 6.3 billion U.S. dollars, while U.S. imports of goods totaled 1.87 billion U.S. dollars, accounting for only 4 percent of the total amount of its imports. So it can be seen that with the United States sudden tariffs, Pakistan’s exports will face resistance, orders will reduce, enterprise operating costs will rise, and employment and other areas of people’s livelihoods will suffer a greater impact.
In this regard, Pakistan should learn from the export experience of similar countries to deal with the current predicament. For example, Bangladesh and Vietnam are also exporting textiles to the United States, and the tariffs subject to sanctions are higher than those of Pakistan. The Bangladesh government’s export policy for 2024-2027 emphasizes greater focus on technological upgrading and digitization, promoting product innovation and higher value-added exports, while establishing bilateral or multilateral cooperation agreements with other countries to cope with the negative impact of tariff fluctuations.
Vietnam has signed and implemented 17 Free Trade Agreement (FTA) with more than 60 countries and territories, diversifying its export markets, and will continue to promote FTA negotiations with the Middle East, Latin America, Central Asia, and other emerging markets. Pakistan should focus on its own opportunities, make reasonable use of the international and domestic markets to break trade sanctions, and continue to innovate cooperation to seize market opportunities.
Firstly, Pakistan should make full use of domestic and international industrial policies to achieve advantages in foreign trade. On 6 February, China and Pakistan issued a joint statement reiterating that they will promote the implementation of the eight actions of the high-quality construction of the Belt and Road in Pakistan and build an upgraded version of the China-Pakistan Economic Corridor (CPEC).
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The second phase of the China-Pakistan Free Trade Agreement (FTA) has been completed. Under the framework of the second phase protocol of the China-Pakistan FTA, we will further negotiate and promote trade liberalization, actively explore possible arrangements for mutual concessions on the basis of mutual benefit and win-win situations, enhance foreign exports, break our dependence on the US market, and form a diversified export pattern. China welcomes Pakistani enterprises to make use of platforms such as the China International Import Expo and the China-South Asia Expo to expand their exports to China and encourages Chinese enterprises with strength to invest in Pakistan on the basis of mutual benefit and win-win situations.
The incumbent Federal Minister for Planning, Development, Special Initiatives, and Inter-Provincial Coordination, Ahsan Iqbal, at the High-Level Progress Review Meeting of the China-Pakistan Economic Corridor (CPEC) on 8 April 2025, reiterated the government’s commitment to strengthening the strategic partnership between Pakistan and China through efficient implementation of the CPEC projects.
At the same time, it can follow China’s proposal to lay out emerging markets. In January 2025, Pakistan agreed on a free trade agreement and mutual cooperation with Kenya, which greatly boosted exports of textiles, rice, and other commodities, and in the future, Pakistan can build a dialogue mechanism with regional economic organizations, such as the East African Community (EAC) and the Southern African Development Community (SADC), with support from the China-Pakistan Economic Corridor (CPEC) project , explore market access opportunities, radiate the African market, actively expand markets with broad prospects other than the United States, build a diversified export pattern for the textile industry, and develop a more resilient tariff regime.
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Secondly, in line with the China-Pakistan Economic Corridor (CPEC) policy, promote the green corridor, conduct a green revolution, achieve partial self-sufficiency in energy for textile enterprises, and develop environmentally friendly fabrics such as bamboo fiber and recycled polyester. By 2030, the China-Pakistan Economic Corridor is expected to boost Pakistan’s economic growth by 2.5 percentage points and play a key role in fueling Pakistan’s industrial development. The Green Corridor is the pillar of the second phase of the China-Pakistan Economic Corridor.
With the concept of green development to help the China-Pakistan Economic Corridor to achieve sustainable development and with China’s technical support, it has effectively dealt with the impacts of the harsh environment and has actively developed solar and wind power projects, and the Karot Hydropower Station project is a successful example of a sustainable energy project. The Karot Hydropower Project is the first green project built entirely with Chinese technology and concepts and is expected to reduce carbon dioxide emissions by 3.5 million tons per year. The Green Corridor is a key initiative to develop green agriculture and ensure food security in Pakistan.
Sustainable agricultural development is not only the basis for poverty alleviation but also the key to green upgrading of industries. Through the promotion of water-saving irrigation and other cleaner production technologies, green cultivation of cotton and other crops has been achieved, and the textile industry has been promoted to be cleaned up from the source. Such transformation not only enhances the competitiveness of agricultural products but also realizes the unimpeded connection between the Green Pakistan Initiative and the Green Silk Road.
The first phase of the China-Pakistan Economic Corridor (CPEC) solved the problem of electricity supply in Pakistan, while the second phase is dedicated to improving economic efficiency, energy conservation, and emission reduction; encouraging Chinese enterprises to participate in renewable energy projects such as wind power and photovoltaics; and optimizing the energy structure, which is very crucial for Pakistan to achieve green growth and economic globalization.
The second phase focuses on increasing Pakistan’s agricultural production, promoting the construction of Gwadar Port, developing Balochistan’s mineral resources, and advancing the construction of two projects, the Azad Pattan Hydroelectric Project and the Kohala Hydroelectric Project, so that products can go out better on the basis of the green production in the first phase.
Gwadar Port is the key node of the China-Pakistan Economic Corridor and the intersection of interests of many countries. We should make efficient use of the location advantage of Gwadar Port, accelerate the pace of green transformation with the launch of the second phase of the FTZ, build a ‘textile logistics hub’ in Gwadar Port, and leverage the ‘One Belt, One Road Initiative’to facilitate the trade of cotton products from Xinjiang to Baluchistan.
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Through this initiative, the complementary advantages of Xinjiang’s abundant cotton raw materials and Pakistan’s processing capabilities can be effectively integrated. In the framework of the interconnection of the industrial cooperation mode system, the construction of an innovative, coordinated, green, open, shared textile industry belt will strengthen the independent development capacity in order to hopefully break through the U.S.’s indiscriminate tariffs that led to the export predicament.
To sum up, against the backdrop of escalating trade disputes between China and the United States, the United States’ indiscriminate imposition of tariffs is an accelerant for the formation of the global multipolar pattern. Pakistan, as one of the countries subject to these tariffs, should give full play to the advantages of domestic and foreign policies and industries.
Internally, it should realize the transformation and upgrading of the textile industry, reduce carbon emissions, and develop clean production. Externally, it should rely more on the favorable conditions of the China-Pakistan Economic Corridor and the Belt and Road Initiative so that textile products can be better promoted overseas, deepen economic cooperation with relevant countries starting from low-sensitive areas, constantly expand the scope of cooperation, enhance political and strategic mutual trust among countries along the routes，and mutually promote the “hard connectivity” of infrastructure and the “soft connectivity” of rules and standards, thereby responding to the negative impact of US tariff hikes with positive concepts and actions and promoting the building of a community of human destiny.
*Qian Geng, Jiaqi Zhang and Yuxin Jiang are scholars at the Baize Institute for Strategy Studies, Southwest University of Political Science and Law, China.*
