The International Monetary Fund (IMF) has warned that the newly imposed reciprocal tariffs by U.S. President Donald Trump are likely to exert downward pressure on Pakistan’s exports and overall economic growth.
On April 2, 2025, the United States announced a significant increase in country-specific tariffs, including a 29 percent tariff on goods imported from Pakistan. This development is particularly concerning given that, while Pakistan’s export sector accounts for only 10 percent of its GDP, the U.S. remains its largest export destination—especially for textiles and apparel, which constitute the majority of that trade.
In its latest report titled “First Review Under the Extended Fund Facility (EFF) Arrangement, Requests for Modification of Performance Criteria, and Request for an Arrangement Under the Resilience and Sustainability Facility (RSF),” the IMF noted that although the full economic impact remains uncertain, the tariffs—along with the resulting financial market volatility—are expected to negatively affect Pakistan’s exports and GDP. As a result, growth projections have been revised slightly downward for fiscal year 2025, and by approximately 0.3 percentage points for FY2026.
The report acknowledged that some tariff rates may change as a result of ongoing negotiations. However, many of Pakistan’s key competitors in the same export categories are currently facing similarly high U.S. tariffs: Bangladesh (37 percent), China (145 percent), India (26 percent), and Vietnam (46 percent).
Beyond the direct effects, the IMF warned of broader economic repercussions. These include potential knock-on effects from slower economic growth in other key trading partners, tightening global financial conditions, reduced remittances, and heightened trade policy uncertainty.
