US Urges Pakistan to Boost Cotton Imports for Textile Growth
U.S. proposes increased cotton purchases for Pakistan under Trump's tariff plan
In a casual chat, Natalie A. Baker, the acting head of the USA, chatted up Federal Minister for Commerce Jam Kamal Khan in Islamabad. The meeting was also graced by the US Chamber of Commerce and the US-Pakistan Business Council (USPBC).
Charles Freeman, Senior Vice President of US Chamber of Commerce, led the USPBC delegation. The meeting discussion circulated around the growing demand of Pakistan's local textile industry for high-quality cotton.
Baker appreciated the recent advancements in agricultural trade, such as the resumption of soybean exports from the US to Pakistan. She emphasized that the cotton sector is a crucial area for mutual growth due to Pakistan's textile industry's demand for high-quality cotton and the USA's prowess in this area.
Meanwhile, Kamal announced that the government is planning a comprehensive strategy to tackle the trade deficit with the USA and to address the market access issues of its companies. He considered the recent 90-day pause by US President Donald Trump in reciprocal tariffs as a "significant opportunity for constructive engagement and building a sustainable, mutually beneficial roadmap."
Kamal also expressed Pakistan's appreciation for the USA as its largest export destination and emphasized the strategic trade relationship. He asserted that Pakistan is dedicated to establishing a conducive trade environment for US businesses and investors, ensuring transparent, rules-based, and fair trade practices.
Kamal highlighted the positive growth trends in Pakistan's economy, with significant improvements in major macroeconomic indicators. The government has taken focused steps to improve the ease of doing business, making it more predictable and transparent. These reforms include reductions in policy rate and inflation, lower electricity prices for businesses, and commitments to policy consistency and regulatory transparency.
Impact of US Tariffs on Pakistan's Textile Industry Competitiveness
Recent US tariff impositions have hampered Pakistan's textile sector, a primary source of the country's export economy. The USA has imposed a reciprocal tariff of 29–30% on Pakistani goods, specifically targeting textiles, which account for over 70% of Pakistan's exports to the USA. This tariff has resulted in higher export costs, making Pakistani textiles less competitive compared to goods from countries like India (26%) and Turkey (10%). The increased costs could potentially reduce export volumes, shift US orders to other suppliers, and lead to job losses and factory closures, particularly among small and medium-sized enterprises.
Furthermore, the textile firms face shrinking profit margins as they absorb the increased costs, undermining their global competitiveness. Pakistan's export basket is heavily concentrated in textiles and heavily reliant on the US market, making the industry highly susceptible to policy changes and global demand fluctuations.
Strategies to Mitigate Tariff Impact
To cope with the tariff's impact and address the underlying trade deficit, several strategies have been suggested:
- Negotiating for tariff relief
- Export diversification
- Enhancing supply chain efficiency
- Strengthening trade diplomacy
- Securing new markets
Comparative Tariffs on Regional Competitors
| Country | New US Tariff (%) ||--------------|------------------|| Pakistan | 29–30 || Bangladesh | 37 || Sri Lanka | 44 || Vietnam | 46 || Cambodia | 49 || China | 125 || India | 26 || Turkey | 10 |
Pakistan faces a lower tariff than some competitors but faces stiff competition from India and Turkey.
- Natalie A. Baker, the acting head of the USA, acknowledged the quality of Pakistan's cotton as crucial for the growth of its textile industry.
- The Federal Minister for Commerce Jam Kamal Khan mentioned the government's commitment to improving the trade relationship with the USA and creating a favorable business environment for US firms.
- The US tariffs on Pakistan's textiles have resulted in increased costs, making Pakistani textiles less competitive compared to some regional competitors, such as India and Turkey.
- Kamal highlighted the challenges faced by Pakistan's textile sector due to the tariff imposed by the USA and discussed potential strategies, like negotiating for tariff relief, export diversification, and strengthening trade diplomacy, to mitigate the impact.
- Despite facing a lower tariff than some competitors, the textile firms in Pakistan struggle with stiff competition from countries like India and Turkey.
- Charles Freeman, Senior Vice President of US Chamber of Commerce, emphasized the need for enhancing supply chain efficiency and securing new markets to help Pakistan's textile industry remain competitive in the global market.
