Trump's Tariff Wall and Pakistan's Textile Reckoning

The latest round of US tariff escalation, which has moved from targeted sector measures toward a broader assertion of industrial policy, is landing on Pakistan’s textile sector at precisely the wrong moment. Exports had been recovering through late 2025 and early 2026, buoyed by a more competitive rupee and recovering global demand. That momentum is now at risk.

The scale of the exposure

Textiles and apparel account for roughly 60 percent of Pakistan’s total export earnings. The United States is the single largest destination market, absorbing around 27 to 30 percent of Pakistan’s garment exports in a typical year. A tariff increase that raises the landed cost of Pakistani goods in the American market — even by a few percentage points — has direct consequences for order volumes, factory utilisation, and the foreign exchange earnings that underpin the IMF programme’s external viability.

The specific rate Pakistan faces under the current schedule is less punishing than those applied to some competitors, but the directional signal matters as much as the number. Buyers are asking whether they can rely on Pakistan as a supply base over a multi-year horizon. Tariff uncertainty makes that question harder to answer.

Who benefits from Pakistan’s discomfort

The most immediate beneficiaries of any reallocation of US apparel sourcing away from Pakistan are Vietnam, Bangladesh, and — depending on how the tariff schedule evolves — potentially India. Bangladesh in particular has been aggressively marketing its duty-free access to the US under preference programmes. Pakistan has no equivalent arrangement with Washington.

A bilateral trade framework with the United States has been discussed in Islamabad for years. It has never moved beyond the discussion stage, partly because the US has not prioritised such an agreement and partly because Pakistan’s own trade policy establishment has been cautious about the domestic political implications of import liberalisation.

The structural answer no one wants to give

Pakistan’s textile sector’s vulnerability to US tariff shifts is, at its root, a product diversification problem. The country exports low and mid-value garments into a market that is becoming more selective about sourcing decisions, not less. Moving up the value chain — into technical textiles, into more sophisticated apparel, into branded manufacturing — is the answer that every policy document of the last twenty years has identified and none has executed.

The current tariff pressure does not create that problem. It exposes it. Whether it also creates sufficient urgency to act on it is the more interesting question.

The IMF dimension

Pakistan’s external account position, which the IMF programme is partly designed to stabilise, depends on export earnings remaining roughly on track. A sustained drop in textile export revenue — not a quarterly blip but a structural decline driven by market access deterioration — would require a policy response that the programme’s current parameters do not easily accommodate. This is a risk worth naming, even if its full materialisation is not yet the base case.