Pakistan remembers Zulfikar Ali Bhutto, on his anniversary I Energy sector’s circular debt reaches PKR 4,700 billion
In Focus
Trump, Tariffs and Pakistan: What, Why and What next?
Rohini Reenum
What happened?
On 3 April, US President Donald Trump slapped “reciprocal tariffs” on a total of 180 countries, including Pakistan. He imposed a 29 per cent reciprocal tariff on Pakistan as the latter charges an average of 58 per cent tariff on goods from the United States. Further, at least a 10 per cent tariff was imposed on “most countries” that trade with the United States. The US has imposed these tariffs in order “to raise revenues, shift trade balance and promote made-in-America goods by discouraging imports.” Further, President Trump also remarked that this was being done in order to stop the US economy from being “cheated.”
How does Pakistan view Trump’s tariffs?
There are two sets of narratives on Trump and his tariffs. First, in general about Trump’s tariff agenda. The second one, focused on what it means for Pakistan.
The News International, a leading daily, termed the reciprocal tariffs by President Trump as “unprecedented.” An editorial in the same titled “Trump’s trade war,” also agreed with the unexpectedness of the decision to put Pakistan on the list. The editorial also referenced experts who have expressed skepticism over the “reciprocal”/ “proportional” nature of the tariffs imposed. The editorial also highlighted that this sweeping decision is underpinned by Trump’s domestic political/economic considerations such as “massive de-industrialization of the US and resulting unemployment and inequality in formerly manufacturing-heavy regions like the Midwest.” In the editorial’s view, this move is partly geared towards pandering to Trump’s supporters who have been an advocate of “a return to ‘Made in the US’.” On the other hand, the editorial argued that this move was a result of “the natural US inclination to be mistrustful and suspicious of foreigners” even though it hypocritically projects itself as the flag-bearer of “human rights and tolerance” and lectures other nations on the same. The editorial referenced how stocks markets around the world have been adversely impacted and noted concerns by experts that tariffs might backfire for the US economy. Further, the editorial cautioned that given the threats of countermeasures by China and the EU, the world seems to be “on the brink of a trade war,” unless Trump backtracks on his decision. Another editorial in The Express Tribune titled “Tariffs turf” termed the US’s move as intended towards “protectionism” as President Trump has imposed tariffs on both “allies and rivals.”
Another leading daily, The Express Tribune, termed the reciprocal tariffs on Pakistan as “unexpected” given that Pakistan does not even figure in the top 30 trading partners of the US list. On the contrary, Ambassador Rizwan Saeed Sheikh said that this move was not unexpected as the tariffs have been imposed on many countries. In another instance, The News International quoted a senior official at the Commerce Ministry who pointed out that this move by the US will put Pakistan at a comparative disadvantage with its regional competitors like such as India and Turkey which are “lower-tariff countries.” This is because Pakistan’s “price-competitiveness” will be adversely impacted in the US market. The US market is crucial for Pakistan as it is the latter’s largest export destination “with exports valued at approximately USD 6 billion.” The US accounts for “nearly a fifth” of Pakistan total exports which makes up for 1.5 per cent of the country’s total GDP. Textiles make up for most of these exports. Leather is another export item. In return, Pakistan imports soybean, cotton and meat from the US. It is to be noted that Pakistan does not impose any duty on cotton, a “5 to 10 per cent on meat and about 3.25 per cent on soybean imports.” It, however, imposes 20 per cent tariffs on iron and steel imports due to protection accorded to domestic manufacturers.
Additionally, with the US, Pakistan has a USD 3 billion trade surplus. For instance, in the first half of this fiscal, between July and March, Pakistan’s export to the US amounted to USD 3.9 billion as compared to the US’s USD 933 million imports to Pakistan. A 15 per cent increase in exports was also recorded with additional revenue of USD 700 million as compared to last year. The country had also recorded trade surpluses with the US in both FY 2024 and FY2023.
Interestingly, Pakistani exporters have emphasized that Pakistan will not be unduly affected as its competitors like “India, China, Vietnam and Bangladesh will also face high tariffs in the US market.” Some Pakistani authorities have also argued that Pakistan should be able to take advantage of higher tariffs imposed on its competitors like “China, Vietnam, Cambodia and Sri Lanka” and increase its textile exports. However, an editorial in The Express Tribune has questioned whether Pakistan can truly increase its textile exports due to the high cost of production. It has thus suggested that Pakistan should “explore new markets; and talk it out with the US for a leniency, and prepare for a tougher competition in times to come.”
What next for Pakistan?
Despite the nature of the move, Pakistan has taken a conciliatory approach wherein Ambassador Sheikh has said that the country will engage in “constructive diplomacy” with the US. Ambassador Sheikh informed that he is set to meet with the US trade representative and both parties are set to discuss the tariffs under the Trade and Investment Framework Agreements (TIFAs). He also emphasized that trade relations between the two countries are an important component of the bilateral relationship and that Pakistan is looking to expand its trade volume with the US.
References
“Trump tariff puts Pakistan at disadvantage against regional competitors,” The News International, 4 April 2025
“Pakistan to engage in ‘constructive diplomacy’ with US on tariffs: envoy,” The News International, 4 April 2025
Mehtab Haider, “How should Pakistan now shape its trade relationship with US,” The News International, 4 April 2025
“Trump’s trade war,” The News International, 4 April 2025
Mahira Sarfraz & Shahid Iqbal, “Challenges crop up as US imposes tariff on Pakistan,” Dawn, 4 April 2025
Shahbaz Rana, “Pakistan opts for diplomacy on Trump's tariff war,” The Express Tribune, 4 April 2025
“Tariffs turf,” The Express Tribune, 4 April 2024
In Brief
GOVERNANCE & POLITICS
Akhtar Mengal to lead Long March towards Quetta
On 4 April, The News International reported on the announcement by Balochistan National Party head Sardar Akhtar Mengal about holding a “long march.” Mengal informed that the long march towards the provincial capital Quetta would begin on 6 April. Mengal alleged that the government had not heeded to the concerns of the Baloch people. Mengal has assured that the long march will be “peaceful.” The long march is intended to pressurize the government to free BYC’s Dr Mahrang Baloch and other detained leaders. Previously, the “three rounds” of dialogue between the Baloch government and BNP-M did not see any breakthrough. Mengal, who has been leading a sit-in protest since the last six days, warned that he would not back down unless the government agrees to fulfill their demands. Further, he warned that if the government attempts to obstruct the long march, it itself would be “responsible for consequences.” He instructed his party members to “hold sit-in wherever they are stopped by the law enforcers.” BNP leaders have alleged that the Balochistan government was “digging trenches” to create obstacles for the protesters at “Quetta-Karachi highway.” (“Mengal announces long march on Quetta on 6th” The News International, 4 April 2025; Saleem Shahid, “Mengal warns of march on Quetta,” Dawn, 4 April 2025)
Pakistan remembers Zulfikar Ali Bhutto, on his anniversary
On 4 April, The News International reported on the PPP Chairman Bilawal Bhutto paying respects to his grandfather and former Prime Minister Zulfikar Ali Bhutto on “eve” of his 46th death anniversary. He reiterated his party’s resolve towards the vision of the former PM of building a “democratic, strong and prosperous” country. He boasted about how Bhutto had led the country right after it suffered “defeat” at the hands of its neighbor. He claimed that it was the “diplomatic brilliance” of Bhutto which had enabled the release of 90,000 Pakistani soldiers captured by India. Further, Pakistan was also able to get back “5000 square miles of land.” In addition to that, Bilawal Bhutto claimed that the country under the leadership of Zulfikar Ali Bhutto was able to significantly transform its “economy, agriculture, and industrial sector.” He recalled that Zulfikar Ali Bhutto’s “visionary labor reforms and land reforms gave the common man dignity and ownership.” Further, he reminded that Zulfikar Ali Bhutto spearheaded the nuclear programme of the country which enabled Pakistan to enhance its “defence” capabilities.(Asim Yasin, “Zulfikar Ali Bhutto’s 46th death anniversary today,” The News International, 4 April 2025)
Internal divide increases within PTI
On 4 April, The News International reported on the increasing internal conflict within the PTI. The Internal Accountability Committee (IAC) of the party has now initiated an inquiry against Taimur Saleem Jhagra who had previously held the Finance and Health ministry in the Khyber Pakhtunkhwa government. The IAC has accused Jhagra of being involved in “financial mismanagement and corruption.” As per the report brought out by IAC, Jhagra was involved in breaching the hiring process that resulted in huge “losses” for the KP government. Jhagra has, however, dismissed all the charges. He has alleged that the investigation is “biased, baseless and politically motivated.” Further, he claimed that IAC was attempting to tarnish his image and that it has not been able to come up with conclusive “evidence” which proves that he is guilty. He alleged that attempts to tarnish his name began when PTI supremo Imran Khan had directed the party to include him in the “cabinet.” (Arshad Aziz Malik, “PTI’s internal strife deepens,” The News International, 4 April 2025)
On counterterrorism:
“The ‘hard state’ was neither conceived nor promised by the founding fathers,” says an opinion in Dawn
On 4 April, in an opinion titled “A hard state?” in Dawn, Shahab Usto called for a departure from a hard state policy to tackle Pakistan’s deteriorating state of security. The author highlighted three major divisions among relevant stakeholders. The first one is the establishment’s promotion of a hard state for stability while ignoring constitutional and democratic fundamentals. Secondly, the country’s political leaders’ continue to debate over the mode and objects of counterterrorism and simultaneously question the legitimacy of the military-aligned government. Lastly, the military’s dissatisfaction with the governance gaps as it is a key contributor to the spike in terrorism. This in turn raises primeval questions regarding how the state ought to be, function, and what determines its legitimacy to fight against terrorism. These questions will continue to exist unless answers are sought from the people of Pakistan. However, the people don’t figure in the conversation as the legislature, election commission, judiciary, and media have become “numbed.” As a result, the idea of democracy in Pakistan has been dismantled. In the name of security and stability, short-sighted and self-serving leaders trade “democracy for stability” “in the absence of a robust rule of law.” Pakistan’s past experiences in the 1948, 1964,1971 and 1999 international wars and the decades-long war on terror have all been influenced by the establishment or dictators. However, it raises questions regarding the extent to which resorting to the “authoritarian or military option” has ever helped the state restore its security. Besides, has democracy ever had the chance to resolve conflict, the author asked. In this regard, he suggested a “federalized democracy under an able and wise leadership” in Pakistan. Its unique geography, ethnic, religious and sectarian compositions require such a system to address its multicultural challenges. “The historical fault lines — religious, sectarian, ethnic and socio-cultural — were papered over by a superimposed state that increasingly relied on coercive policies and apparatuses.” Consequently, Pakistan became a ground for competing interests with some resorting to extremist means to achieve their ends. Therefore, instead of adopting a hard state, a soft state is necessary to knit together its frayed political, economic, and social fabric. (Shahab Usto, “A hard state?” Dawn, 4 April 2025)
ECONOMY
Scant growth in merchandise exports: PBS data
On 3 April, according to the Pakistan Bureau of Statistics, merchandise exports witnessed a scant growth of 1.95 per cent annual growth in March. It marks a progression from the 5.57 per cent contraction in February with a sustained momentum of earnings surpassing USD 33 billion by June. The growth is attributed to the rise in exports of textiles, rice, and other agricultural products from Pakistan in July as a result of a stable exchange rate and improved orders. During the first nine months of fiscal 2025, export proceeds were estimated at USD 24.69 billion in the July-March period. It is a 6.33 per cent increase from the USD 22.93 billion received during the same time last year. This is owed to the redirected sourcing of cloth from China and Bangladesh to Pakistan. However, imports also grew along the same figures of 6.33 per cent, at USD 42.58 billion in the July-March 2025 period compared previous year’s USD 40.05 billion. This strain is attributed to the increased demand for fuel, raw materials and machinery, further widening the trade deficit by 4.5 per cent to USD 17.9 billion. (“Merchandise exports rise in March,” Dawn, 4 April 2025; Israr Khan, “Goods exports rise by 7.7% to $24.7bn in nine months,” The News International, 4 April 2025)
ENVIRONMENT, ENERGY & WATER
PM Sharif announces decrease in electricity prices by PKR 7.41
On 3 April, PM Sharif declared that the electricity prices would come down by PKR 7.41 per unit for domestic consumers. The domestic consumers are currently paying PKR 45.05 per unit. The decrease in power tariff for domestic users will be applied immediately. For industrial consumers, this number will be PKR 7.69 per unit. He called the reduction in price an “Eid gift.” PM Sharif has vowed that the electricity prices would further come down in May. He has informed the public about initiating “structural reforms” in “power sector” for bringing down electricity prices. He reminded that the PML-N supremo Nawaz Sharif in the election manifesto had vowed to cut down electricity prices which is now being accomplished. PM Sharif expressed gratitude towards Chief of Army Staff Asim Munir for persuading the Independent Power Producers to let go of PKR “3696 billion in the next 15 years.” He also acknowledged the difficulty incurred in persuading the International Monetary Fund for decreasing electricity prices, terming it as “Himalayan task.” PM Sharif is hoping that decrease in power tariffs would lead to a surge in “economic activities.” He has asked the business firms to put efforts in surging export numbers and duly pay their “taxes.” He also informed about the “circular debt” owed by the power industry worth PKR 2.393 trillion which the government would attempt to bring down in the next “five years.” Further, he stated that the power industry has been directed to increase “savings” by bringing down incidents of “theft” of electricity and “inefficiencies.” (Israr Khan, Khalid Mustafa, Mehtab Haider and Muhammad Anis “As economy turns the corner, PM announces massive power tariff cut,” The News International, 4 April 2025; Khaleeq Kiani, “Major relief in power bills for homes, industry,” Dawn, 4 April 2025)
Coalition partners at logger-heads on Sindh canal project
On 3 April, the Pakistan People’s Party (PPP)’s Chaudhry Manzoor sought answers pertaining to the rationale behind the new canal project while Sindh suffers a mounting water shortage. Under the Green Pakistan Initiative launched by the center, six canals will be constructed to irrigate 1.2 million acres of land in South Punjab. This has been met with widespread opposition among Sindh’s nationalist parties and the PPP as there is a fear of water depletion in Sindh’s Indus riverwater share once the canal is constructed. In response, Punjab’s Information Minister, Azma Bokhari emphasized determining which province the water belonged to, Sindh or Punjab. She laid claims that Punjab will not “infringe upon its own” or take away what belongs to others. Separately, PPP leader Sherry Rehman reiterated President Asif Ali Zardari’s stance, cautioning the government against taking “unilateral” decisions of constructing more canals on the Indus despite remonstrations from “federating units.” (Amjad Mahmood, “Tiff over canals brings Punjab allies face to face,” Dawn, 4 April 2025)
Energy sector’s circular debt reaches PKR 4,700 billion
On 4 April, The News International divulged a Ministry of Finance declaration stating that the circular debt of energy sector as a major fiscal risk. As of December 2024, the sector’s circular debt was recorded at PKR 4,700 billion. The ministry lacks an immediate strategy to pay off its circular debt as there remains little space for tariff adjustment. The government also lacks the fiscal capacity to recompense the circular debt. If the issue remains unresolved then it will “limit essential development spending and increase borrowing requirements,” consequently weakening Pakistan’s fiscal sustainability. (Rana Ghulam Qadir, “Energy sector circular debt reaches Rs4,700bn,” The News International, 4 April 2025)
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The negative effects of this hybrid regime are harming Pakistan from all sides. The scourge of terrorism is uncontrollable, there is a period of unrest in the country, the incidents of terrorism are continuously increasing, the people are taking funerals, but the focus of this fake government is only focused on suppressing the PTI and keeping Imran Khan in jail.
- Mian Aslam Iqbal
The people of Balochistan must be given their rights and respect
Shahid Khaqan Abbasi
- Nadeem Malik
I have full faith in Allah that I will come out victorious and celebrate the next Eid with my people, God willing.
Imran Khan
- PTI
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"Misconceived state policies have pushed the country into an abyss."
- An opinion in Dawn, 'A hard state?.’
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