According to the Trading Beyond Borders report, the new tariff regime has lifted landed costs for Pakistani goods by up to 18%. Moreover, the US now applies a 10% baseline duty on all imports, plus extra country-specific charges between 11% and 50%. Pakistan’s rate initially reached 29% but dropped to 19% after diplomatic talks.
The report says Pakistan’s textiles now face combined tariffs of 20% to 35%, which could shrink export volumes by 20% to 30%. Furthermore, estimated revenue losses may reach $490 million a year, adding strain to foreign exchange reserves and the current account.
The shock will likely hit industrial centers first. For example, mills in Faisalabad, Karachi and Lahore depend heavily on US orders for textiles, apparel and leather goods. The report warns that thousands of workers could lose jobs as demand cools.
The study also highlights broader access barriers. In addition, Pakistani exporters face rigid customs valuations, restrictions on genetically engineered inputs and strict halal compliance rules. Placement on the US Special 301 Watch List further complicates market entry for high-value products.
Pakistan’s exports to the US grew from $3.7 billion in 2014 to $4.3 billion in 2025. However, the report says this growth trend may reverse under the new tariff structure. Textiles and leather goods, which dominate the export basket, remain especially vulnerable.
The report notes that India is experiencing even greater disruption. Specifically, cumulative tariffs on textiles, jewellery and pharmaceuticals now reach 50%, prompting capital outflows above $15.5 billion. A 100% tariff on branded drugs has intensified the pressure on Indian exporters.
Amid these regional setbacks, the report urges South Asian countries to expand trade among themselves. Consequently, Pakistan could unlock $2 billion to $3 billion in additional exports by boosting commerce with neighbouring economies. The authors argue that regional integration may offer the quickest buffer against US policy shifts.
