EDITORIAL: US tariffs wiped out stock markets across the globe, even in Pakistan - an economy not that is integrated with the world economy. Recent reports from within and outside the US suggest mounting resistance to the tariffs.
In the US, four Republican Senators broke ranks and voted with the Democrats to block Trump’s tariffs against Canada though this is largely a symbolic move as the resolution is unlikely to pass through the Republican held House of Representatives.
China, which imposed retaliatory tariffs against largely the US farmers, a core Trump support group, is likely to mount resistance from the electorate though it is highly unlikely that Trump maybe swayed by a fall in popularity as he cannot stand for another term as president as per the constitution.
In addition, in a rare move, reportedly, the foreign ministers of China and two US allies in the region – Japan and South Korea – met in Tokyo a couple of weeks ago and agreed on the need to seek common ground on East Asian security and economic issues.
This week China’s stock market rebounded after an initial steep sell-off due to the US tariffs imposed a week ago, as state supported funds picked up assets and the central bank pledged loans to stabilize the market.
This accounted for the Heng Seng China Enterprises Index rise by 3.5 percent. In other words, it is expected that countries have not only begun to react to Trump tariffs by upping their own tariffs against US imports but also in adjusting to a new as yet evolving international trade order.
And in this change what is significant is that the World Trade Organisation, hitherto the arbiter of all trade disputes, has been rendered all but redundant by the US President.
Pakistan’s stock market too has reacted negatively which, according to some analysts, must be appreciated as it may be recalled that Trump’s statement soon after he was elected led to a fall in all major currencies of the world with the Pakistani rupee, inexplicably, remaining firm. Hence with our total exports to the US at about 3.07 billion dollars in the first six months of the current year against the country’s total exports of 16.639 billion dollars or 18.4 percent, a significant percentage, the stock market decline presents an accurate picture.
Analysts suggest that the best way out would be for the government to talk with each major export group to the US and come up with firm proposals that can be discussed with the US. To date the Deputy Prime Minister and Foreign Minister Ishaq Dar called his counterpart Secretary of State Marco Rubio to discuss tariffs on Pakistani goods, a move that must be supported as it indicates seeking a rapprochement rather than retaliation which in our case is unlikely to make any impact on the US.
However, there are no reports that Dar took the relevant vulnerable stakeholders on board, who would be much more aware of which specific strategies may work in their favour. This lapse needs to be rectified immediately.
What is also ironical is that while the US dollar has weakened as a consequence of tariffs against all major currencies it still remains firm against the rupee which, critics argue, may imply that the government is more focused on meeting its economic vulnerabilities especially as they pertain to the ongoing International Monetary Fund (IMF) programme.
There is, therefore, a need to not only acknowledge the country’s deepening economic needs as a consequence of external factors, notably the tariffs imposed by Trump, but also susceptibilities as they impact on our deal with the lender agencies.
Copyright Business Recorder, 2025
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