The United States has reduced its tariff rate on Pakistani goods to 19%, slightly lower than rates on regional competitors. India, Bangladesh, Vietnam, and Sri Lanka face U.S. tariffs ranging from 20% to 25%. This move gives Pakistan a potential edge in the American market. Experts say the decision reflects improved diplomatic efforts. However, they also warn that the benefit could be lost if key economic issues remain unaddressed.
Despite the tariff cut, Pakistan’s exports may not grow much. Economists and business leaders blame high production costs. Energy prices, expensive loans, and reduced export incentives are the main hurdles. These factors make Pakistani goods more expensive globally. Experts stress that the government must act quickly to reduce costs.
Jawed Bilwani of the Karachi Chamber of Commerce says electricity is the second biggest cost after cotton in textiles. He urged the government to fix the Export Finance Scheme. Bilwani believes restoring the scheme is vital for the textile sector. Without support, many exporters may lose their place in international markets.
Dr. Usama Ehsan Khan from PRAC listed three key problem areas: interest rates, electricity, and gas prices. He said Pakistan’s interest rate is 11%, much higher than its inflation rate. Lowering rates could reduce business costs and debt payments. Each 1% cut could save up to Rs250 billion per year.
Power and gas tariffs in Pakistan are higher than in competing countries. Electricity costs around $0.16 per unit, while other countries pay $0.06–$0.10. Gas is also expensive for exporters. Meanwhile, labor productivity remains low at $7.20 per hour, below most regional peers. Experts warn that without bold reforms, Pakistan may fail to benefit from this trade opportunity.