President Donald Trump has walked the talk by slapping trade tariffs across the board on allies and rivals. The intention is one of protectionism, as the New Yorker billionaire believes that American interests are in need of being protected from mindless concessions that the world had availed from the lone superpower. To what extent it impacts foreign relations seems to be a secondary focus for Trump. With this arithmetic in vogue, a minimum of 10% tariff will apply to most countries, especially the allied-ally such as the UK, and up to 20% on EU members.
Pakistan too has come in the line of fire as tariffs have gone up to 29%, leaving the beleaguered economy in a guessing-game in its aftermath. Statistics-wise, Pakistan charges 58% on imports from the US, and ships nearly a fifth of its exports primarily in the textile sector, which accounts for 1.5% of Pakistan’s GDP. The only point of consolation while vetting the graph of new tariffs in the region is that Sri Lanka and Bangladesh have been put on the mat with more tariffs on their exports to the mainland, and this is where Pakistan can buckle up to stay afloat.
But the question arises: with the textile sector already in the woods due to higher cost of production, will Pakistan be able to compete in the international market? Moreover, the strategy to diversify exports to Europe is also cumbersome as the GSP-Plus status extension hangs in the balance, and a lot of fence-mending is desired on the home front.
Pakistan’s biggest dilemma with reference to exports is its limited basket of products. All that is desired is a proactive policy to tap new markets and to ensure that the product is competitive and innovative in essence. With no quick-fix in sight, it would be a challenge for the policymakers to save the $6 billion annual exports to the US that account for 18% of our total exports. It’s time to take up the issue on two fronts: explore new markets; and talk it out with the US for a leniency, and prepare for a tougher competition in times to come.
#Tariffs #turf
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