LAHORE: If Donald Trump continues to impose higher tariffs on imports from China, Canada and Mexico, American importers may seek alternative suppliers. Pakistan could benefit if it positions itself as a competitive source for textiles and apparel.
Pakistan does not directly compete in sectors dominated by Mexico and Canada, so the impact would be minimal. However, since our country imports a significant share of machinery, electronics, and raw materials from China, any slowdown in China’s economy due to US tariffs could indirectly affect Pakistan. If Chinese companies struggle to export to the US, they may lower prices or divert exports to other markets, potentially making some Chinese goods cheaper for Pakistan.
If Trump targets China with tariffs, he may also pressure countries allied with China, including Pakistan. The US could also increase trade pressure on us, particularly regarding the Generalised System of Preferences (GSP) benefits.
A trade war with China could weaken global demand, affecting commodity prices. While Pakistan might benefit from lower import costs, global supply chain disruptions could drive inflation, especially for products dependent on intermediate goods from China. Trade tensions could also trigger capital flight from emerging markets to safe-haven assets like the US dollar, leading to rupee depreciation, higher import costs, and rising external debt burdens.
If the Chinese economy slows, Pakistan could benefit from cheaper imports but may face reduced demand for its exports to China. Increased US pressure on Pakistan’s trade ties with China could also create further economic uncertainties, including currency volatility and inflation risks. Bangladesh, one of the largest exporters of apparel, stands to gain from higher US tariffs on Chinese textiles. With duty-free access under the GSP for least developed countries (LDCs), demand for Bangladeshi garments — particularly mass-market, low-cost clothing like cotton T-shirts, jeans, and knitwear — could rise. However, since Bangladesh imports many raw materials, including synthetic fabrics, dyes, and machinery from China, any slowdown in China or price increases could raise its input costs. Competition from Vietnam and India for diverted orders may also limit its gains. Still, Bangladesh is poised to be one of the biggest beneficiaries due to its established textile supply chain and low labour costs.
India, with its diverse textile industry producing cotton, synthetic fabrics, and technical textiles, could see increased exports of yarn, fabrics, and readymade garments to the US as companies shift sourcing away from China. However, India lacks duty-free access to the US, and its high production costs — particularly in electricity and logistics — along with rigid labour laws, make it less attractive than Vietnam. Additionally, if China floods the Indian market with cheap textiles, domestic producers could suffer. While India may benefit in textile raw materials, Bangladesh and Vietnam remain stronger competitors in finished apparel.
Vietnam is already a major apparel supplier to the US, with many Chinese garment companies relocating production there to bypass US tariffs. If Trump increases duties on China, this trend will likely accelerate. However, Vietnam’s rising labour costs and reliance on Chinese textile inputs could pose challenges. If the US perceives Vietnam as a backdoor for Chinese products, it may face increased scrutiny. Nonetheless, Vietnam is expected to gain market share at China’s expense, particularly in mid-to-high-end garments. As one of the world’s largest cotton producers, Pakistan must take strategic steps to enhance its cotton production and leverage its well-established spinning and weaving industry. Unlike Vietnam and Bangladesh, which rely on imported cotton, Pakistan has a natural advantage in cotton-based textiles, particularly denim, home textiles, and knitwear. The US is already a major buyer of Pakistani denim and bed linen.
To capitalise on this opportunity, Pakistan must expand its capacity in cotton-based garments, especially denim, knitwear, and towels, which are in high demand in the US. Adopting eco-friendly processing methods and reducing reliance on China for inputs could further strengthen Pakistan’s position in the global textile market. However, Pakistan remains dependent on China for synthetic fabrics, dyes, and machinery. If China experiences an economic slowdown or if US scrutiny extends to Chinese-linked supply chains, Pakistan’s production costs could rise, posing a challenge to its textile industry.
