Beyond Rivalry: How U.S. Tariffs on India and Bangladesh Could Reshape Pakistan’s Trade Trajectory

Abstract

The recent changes in trade policy of the United States, especially the newly imposed tariffs on some of the largest exporting economies, for example, India and Bangladesh, have negatively disrupted global trade and caused changes in trade flow sourcing. In this context, the current study aims to analyse how Pakistan may be able to take advantage of these disruptions, tariffs and trade imbalances by establishing itself as a potential substitute supplier to the U.S. market. Using a qualitative and exploratory design, the author analyses policy documents, global trade reports and documents by the WTO, World Bank, UNCTAD, as well as expert interviews, and examines Pakistan's position for the emerging opportunity. To this end, using thematic analysis, the author explains how Pakistan's textile, apparel and leather manufacturing industries, and selected other manufacturing industries, in particular, stand to gain from the trade diversion and increased exports that may be a direct result of the tariffs. The author also discusses the potential for the expansion of Special Economic Zones, and the increasing cross-border and direct foreign investment, to facilitate subcontracting and the reorganisation of production, to improve Pakistan's position in global value chains. In addition, the author discusses the need for sufficient policy reforms, trade readiness, diplomacy, and in particular the need for export readiness, to avoid losing such positive impacts. This study adds to the limited literature from a qualitative stance on the benefits of tariffs for a third-party country and provides Pakistan with a framework to utilise external trade disruptions for sustainable economic development.