Pakistan's Economy Suffers as US Increases Tariffs on China, Leading to Stock Market Decline and Potential Export Losses of $564 Million.
Tariff War: The ongoing tariff war between the United States and China has reached a critical juncture. Former US President Donald Trump's announcement of imposing significant taxes on China has dealt a major blow to Pakistan's economy. While the Chinese stock market shows some stability, Pakistan's economy has been significantly impacted.
Pakistan's Market Decline Exceeds China's
Donald Trump's tariff policy severely affected the Pakistan Stock Market. The decline was so significant on Monday that trading had to be halted. On Wednesday, the KSE-100 index plummeted by 2,640.95 points, closing at 112,891.48. On Friday, the PSK fell by 424.21 points, reaching 115,765.
Pakistan's market performance significantly underperformed China's. While the Shanghai Stock Index saw a slight increase of 14 points, the index experienced a nearly 4% decline over the past five days. The year-to-date (YTD) return has dropped to -3.39%.
US Tariff Threat to Pakistan
Although the US has temporarily suspended its decision to impose a 29% reciprocal tariff on Pakistan for 90 days, the psychological impact on Pakistan's economy is evident. According to a policy think tank report, if this tariff is implemented, Pakistan could face export losses of approximately $564 million in fiscal year 2025-26. In a worst-case scenario, this loss could reach $2.2 billion.
China Responds Firmly, Declares 'We Are Not Afraid'
Chinese President Xi Jinping responded bly, stating that "there are no winners in a tariff war." He also asserted that China has never relied on others and that it is not afraid of any undue pressure. According to the Xinhua News Agency, Jinping stated that China has progressed for the past 70 years based on self-reliance and hard work and will continue to adhere to its strategy.
Global Trade Faces Crisis
Analysts believe that if this tariff war escalates further, its impact will not be limited to the US, China, or Pakistan alone. Global supply chains, inflation, and emerging economies will all face significant consequences.
