In a dramatic shift on the global trade stage, export orders traditionally destined for China may soon pivot to more competitive markets like Pakistan, according to a report by AKD Securities Limited. In its Pakistan Strategy Report 2025, the brokerage house highlighted that as the USA ramps up tariffs on Chinese imports, industries such as textiles and other export-oriented sectors are expected to drive increased energy demand and bolster Pakistan’s export market.
Trade War Dynamics and New Tariff Measures
The report comes on the heels of new protectionist policies spearheaded by President Donald Trump. The administration has imposed a 10% tariff on all Chinese imports a move many economists call the start of a broader trade war. Trump has signalled that the European Union might be his next target for higher tariffs, though a timeline for these measures has yet to be disclosed.
Implications for Pakistan’s Economy
As export orders shift away from China, Pakistan could see an influx of business in its textile and export sectors. However, the report warns that this potential windfall may be offset by broader economic challenges. AKD Securities noted that the newly implemented US restrictions could adversely affect Pakistan’s exports by contributing to a widening trade deficit and putting pressure on the local currency. A decline in export revenues might further strain foreign exchange reserves, exacerbating economic vulnerabilities.
Challenges for CPEC and Diplomatic Ties
The report also raises concerns regarding the China-Pakistan Economic Corridor (CPEC). US-led restrictions could disrupt ongoing trade and infrastructure projects under CPEC, complicating the economic and diplomatic ties between the involved nations. These developments could have a cascading effect on regional trade dynamics, influencing both investment flows and project stability.
Risks of Non-Compliance with IMF Targets
Further complicating matters, AKD Securities highlighted the risk of non-compliance with International Monetary Fund (IMF) targets. Failure to meet these targets could precipitate an early exit from the IMF program, potentially halting critical financial inflows and destabilizing the currency. Such a scenario would likely intensify pressure on Pakistan’s foreign reserves and overall economic stability.
