Strategic Interests or trade tensions | OP-ED | Security Lense | 30-April-2025
The Effect of Trump’s recent Tariffs on Pakistan’s Trade
Trade tensions are the result of disagreements between countries over trade policies, rules or decisions. These tensions are usually created to promote local businesses or to pressurize other countries to change their trade policies. Countries usually put taxes on each other’s goods which are called tariffs, these taxes make the imported products cost more, leading to a boost in local industries and hence exports. These steps are usually taken by countries to protect their economies and force behavior change of other countries. In the recent years, the U.S. President, Donald Trump, created many trade tensions especially with China but that affected other countries also, including Europe and Pakistan.
Why Countries have strategic interests
As mentioned above, sometimes countries start these tensions to protect their economies and promote their local industries. If a country feels like products from other countries are hurting their local businesses or economies, they put taxes on imports to assist the local industries and encourage exports.
Trade tensions can also be political. Countries might use the tactic of increasing taxes on imports to influence the behaviors of countries, their trade policies or their policies regarding labor laws, environmental protection etc.
Strategic interests mean thinking about long-term benefits. If a country wants to stay strong economically and politically, it can use trade tensions as a tool to fight for these bigger goals.
Trump’s Tariffs: An Overview
In 2017, when Trump became President of the United States, he promised to put “America First”. One of Trump’s major plans was to fix what he believed were unfair deals. He thought that other countries especially China were taking advantage of U.S. by selling their products at a lower price and hurting the labor force of America as well as American industries. Trump also believed that the U.S. was in a trade deficit i.e. importing more than exporting.
To overcome this issue, Trump decided to put tariffs on foreign products hoping that it would encourage the citizens of America to buy American products instead of imported products as tariffs increased the prices of foreign products. He believed this tactic would help grow local industries and create more jobs.
Trump believed that the U.S. was being treated unfairly and in 2018, he officially started the US-CHINA Trade War, a major economic conflict between the two largest economies through his actions. In March 2018, Trump announced 25% tariffs on imported steel and 10% on aluminum, hitting countries including Canada, Mexico and European Union while in July 2018 he placed 25% tariffs on $34billion worth of Chinese goods. In September 2018, 10% tariffs on $200billion of Chines goods later raised to 25% in 2019 were imposed. In December 2019, after many rounds of talks, tariffs on about $250billlion worth of Chinese goods stayed in place. As a result, the U.S. imports from China dropped by 16% in China.
In 2025, Trump took over the President office again, leading to his aggressive decisions regarding trade policies. In February 2025, Trump introduced 35% tariffs on all Chinese high-tech imports meanwhile in March 2025 he announced 25% tariffs on European cars, targeting Germany, Italy and France. Luxury goods such as wine, cheese and fashion items were also taxed at 20%. In April 2025 warned of possible tariffs on Indian pharmaceuticals and Vietnamese textiles while his administration is considering universal tariffs on all countries to balance out America’s trade deficit.
Strategic Interests Behind Trump’s Tariffs
Trump’s reasons for these tariffs are to reduce dependence on Chinese technology, punish the Europeans for treating U.S. unfairly, promote American industries and create jobs but from another perspective we can see that Trump’s tariffs are not just about economics or trade numbers – they are a part of bigger strategic plan. His real goal is to protect America’s global leadership by containing China as China is said to be America’s biggest economic and political rival, he wants to slow down China’s rise as a global superpower, especially in high-tech industries like AI, Green Energy and electronics.
He wants to strengthen America’s local industries while he also believes that tariffs will give America leverage in making stronger trade agreements. While in the case of Europe, he argues that they have taken unfair advantage of the U.S. by selling their goods while not buying enough. Trump also argues that America’s dependence on foreign goods and services weakens the National security.
Impact on Pakistan
Pakistan has not been a direct target of Trump’s trade policies, but as global market has been affected significantly, e.g. global stock markets fell by 5% in February 2025 after Trump’s new tariffs on China, Pakistan’s economy has also been hurt in many ways.
- Falling Global Demand
Trade wars between countries affect the global economy significantly. Pakistan exports surgical tools, rice, sports goods and textiles etc. Because of these trade wars, big economies such as China, Europe and U.S. decrease their imports leading to a great fall in global demand. As a result, Pakistan’s exports suffer badly. Moreover, in early 2025, Pakistan’s textile sector has already reported a fall of about 7% in exports compared to the previous year.
- Disrupted Supply Chains
Pakistan exports cotton and leather to Chian and Europe as raw materials for manufacturing, becoming a part of the global supply chain. Due to the heavy tariffs imposed on them, Europe and China are cutting down on their productions leading to less demand for raw materials affecting Pakistan trade significantly.
- Loss of Investment
Investors prefer economically and politically stable countries to invest in. Pakistan has already been unstable because of past political events and economic crisis and as a result it has been facing reduces Foreign direct investment (FDI) already. Trade wars create more fear which has damaged Pakistan’s economy even more as investors are more reluctant to invest in new projects now.
- Missed Opportunities
To avoid greater losses, some companies shifted their production from China to other countries such as LG Electronics shifted their smartphone production from China to Vietnam, Nike and Adidas shifted most of their footwear production to Vietnam and Indonesia, Hasbro shifted their production from China to Vietnam and India etc. Although Pakistan has a cheaper labor force, it did not benefit from the trade war because of internal problems of Pakistan such as political instability, mediocre supply chain infrastructure, frequent electricity shortages and weak legal protection system.
- China-Pakistan Relations under stress
Pakistan and China have a vast history and has been very close to each other especially through CPEC. As Trump imposed tariffs on China, its economy was impacted leading to China investing less in foreign projects. As a result, Pakistan has faced a delay in Chinese funding and a decline in CPEC’s progress.
- Rising Costs
Pakistan is an import-led economy, importing high-tech products, chemicals and machinery etc. These tariffs have led to a significant global disruption in trade, imports are getting more expensive than before disturbing Pakistan’s local production as well as overall economy.
Conclusion
Trade tensions are more than just about exports and imports. Trump’s trade policies from both his terms as a president has made it clear that countries should and will struggle to preserve their strategic interests. Because of this trade war, Pakistan has already faced a lot such as missed opportunities, rising costs, decline in exports, loss of investments and disturbed industries as well as overall economy.
Pakistan should take these tensions as a warning to work on its infrastructure, political conflicts, economic crisis, foreign and trade policies, legal protection system and local businesses to keep up with the ever-evolving world and avoid being impacted from any global trade tensions in the future.
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