Published on: August 26, 2025 1:29 PM
Pakistan’s Ministry of Commerce has requested special incentives for export-oriented sectors affected by 19 percent ad-valorem tariffs imposed by the United States. Commerce Minister Jam Kamal Khan has sought Prime Minister Shehbaz Sharif’s support to implement “handholding” measures to safeguard key industries from tariff-related losses. The request follows an executive order by US President Donald Trump, announcing additional tariffs ranging from 10 to 50 percent on imports from trading partners, including a 29 percent reciprocal tariff on Pakistan.
Following the announcement, the Ministry of Commerce established a Steering Committee and a Working Group to analyze the impact of US tariffs on Pakistan’s exports. After consultations with the private sector, the ministry developed a strategy, which was negotiated with US officials through multiple rounds of virtual and in-person meetings. These negotiations successfully reduced Pakistan’s additional ad-valorem tariffs from 29 percent to 19 percent, giving the country a competitive advantage over regional rivals such as Bangladesh, Vietnam, and India.
The ministry also highlighted that India faces a 25 percent tariff, giving Pakistan a 31 percent comparative edge in exporting to the United States. On Prime Minister Shehbaz Sharif’s direction, meetings were held with leading exporters and SMEs from sectors including textiles, rice, salt, surgical goods, sports equipment, electronics, food, agriculture, and leather. These discussions aimed to create an action plan to boost exports and maintain Pakistan’s competitive position in the US market.
Industry representatives appreciated the government’s trade diplomacy but emphasized the need for predictable policy support. They called for measures to lower manufacturing costs and create a favorable business environment. In response, the Commerce Ministry submitted detailed recommendations to the Prime Minister to ensure consistent policy interventions and strengthen Pakistan’s export performance.
Key proposals include authorizing Rs. 12 billion for verified Drawback of Local Taxes and Levies (DLTL) claims, processing future tax refunds within 72 hours, revaluing custom duties on mango pulp, and rationalizing sales tax on local purchases. The ministry also suggested removing cross subsidies from industrial power tariffs and resolving RLNG arrears to avoid industrial disconnections.
Additionally, the Maritime Affairs Division was asked to reduce shipping time to the US from 48 days to 24 days, and new DLTL incentive schemes were proposed to further support exporters. These measures aim to keep Pakistan’s export sectors regionally competitive and ready to seize future business opportunities in the United States.
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