Pakistan’s New Tariff Policy Sparks Concerns Among Manufacturers

ISLAMABAD: Pakistan’s manufacturing sector faces significant challenges following the implementation of the National Tariff Policy 2025-30, which has drawn criticism for its potential negative impact on local producers. This policy, approved last year, is seen as a radical economic experiment influenced by the World Bank’s 2022 Country Economic Memorandum.

The memorandum highlights the concept of ‘anti-export bias’ as a critical factor contributing to Pakistan’s low export-to-GDP ratio, ranking the country second-highest for tariff cascading globally. This situation encourages manufacturers to prioritize high-margin domestic markets over low-margin exports, as evidenced by a hypothetical scenario where a 10% import tariff on a $100 bike raises its price to $110, prompting local manufacturers to increase their prices similarly.

This shift in focus could have broader implications for Pakistan’s economy, potentially stifling export growth and limiting the country’s ability to compete internationally. Critics argue that the policy may reinforce existing issues of ‘elite capture’ and ‘protection-driven profitability,’ further entrenching influential groups within the domestic market.

As stakeholders assess the fallout from this policy, upcoming discussions among industry leaders and government officials are expected to address the concerns raised by manufacturers. The future of Pakistan’s economic landscape may hinge on how effectively these challenges are navigated in the coming months.