Trade balance indifferent to Trump or No Trump

The outcome of the US presidential election, whether it results in a win for Republican Trump or Democrat Kamala Haris, is not expected to significantly impact US trade policy with Pakistan.

Pakistan's economic ties with the United States are multifaceted and deeply significant, with the US being a crucial market for Pakistani exports, accounting for nearly a fifth of Pakistan's total exports.

Trump's 'America First' policies propose a 60% tariff on Chinese imports and a possible 10% tariff on imports from other countries, which could include Pakistan. Pakistan's main exports, textiles and apparel, do not receive preferential access in the US market.

These exports mainly cater to middle-income and lower-middle-income groups. A 10% across-the-board tariff increase could eliminate the narrow price advantage Pakistan holds, already weakened by high electricity tariffs, interest rates, and inflated domestic costs.

During Trump's tenure from FY17 to FY20 (four years), Pakistan's exports to the US amounted to $15.5 billion, accounting for 18% of the total exports to the US in the last 20 years.

In contrast, during four years of Biden's administration, Pakistan's exports to the US stood at $23.2 billion.

Over the past 20 years, Pakistan's exports to the US have totaled $86.6 billion. Notably, Pakistan's trade balance with the US has always been in favor of Pakistan.

American investors have invested $157 million in Pakistan. Around 60 American companies are operating in various sectors in Pakistan, including FMCG, oil and gas, banking, and logistics. According to the 2023 report by the American Business Council, the total sales volume of American companies in Pakistan was PKR 876 billion.

Over the past three years, these companies have invested PKR 74 billion. Additionally, due to business activities, these companies have contributed PKR 271 billion in taxes to the national treasury.

The potential tariffs under Trump's policies could pose challenges for Pakistan's exports, but the overall trade relationship between the two countries remains strong and significant.