Pakistan Tariff Cuts Spark Duty Burden Debate
Pakistan tariff cuts have opened a sharp debate over how import duties should be measured, and whether cutting them will make local industry more competitive. The argument came into focus at a three-hour dialogue at IBA Karachi on Friday.
The Centre for Business and Economic Research organised the session during the school’s 6th annual international conference. It centred on the National Tariff Policy 2025-30, which aims to cut customs-duty slabs from five to four and bring the average tariff to 9.7 per cent by 2030.
Pakistan tariff cuts: the numbers in dispute
The sharpest disagreement was over how high the tariffs are. Dr Manzoor Ahmad, a former ambassador to the WTO, argued all duties should be counted. “A duty by any name is still a duty,” he said. Importers pay 10.3 per cent in customs duty, 3.65 per cent in additional duties and 4.57 per cent in regulatory duties, totalling 18.5 per cent, twice Vietnam’s level and three times Malaysia’s. All 20 of the fastest-growing exporters had cut tariffs over the past decade, while Pakistan raised its own by 11 per cent.
Tecno Group chief executive Aamir Allawala called the comparison “wrong on its facts, its concepts and its logic”. The policy added Pakistan’s additional duties to customs duty but counted only customs duty for others, lifting the figure from 10.3 to 18.5 per cent. The same method would put Pakistan fourth among 12 countries, below India, Bangladesh and Nepal. He blamed weak exports on security, few trade agreements, and high electricity and interest rates.
What else holds exports back
Pakistan Single Window chief domain officer Naveed Abbas Memon said tariff cuts would mean little if costly border procedures stayed. “Tariffs are cut on paper, but costs are cut at the border,” he said, citing UNCTAD’s Global Trade Update of May 2026. In 88 per cent of countries, non-tariff measures cost exporters more than tariffs, and clearer rules could cut those costs by 19 per cent. Lower duties would not help if goods stayed held up at ports.
FBR member Mukarram Jah Ansari, from Pakistan Customs, turned to Pakistan’s place in global trade. Trade is 27.2 per cent of GDP, against a world average of 68 per cent and 190 per cent in Vietnam. “The problem is not excessive imports but insufficient exports and weak integration into global supply chains,” he said. Import-stage taxes make up 40 to 50 per cent of FBR collections, and customs-duty revenue showed no growth this quarter.
Louie Dane, senior economic adviser at the Foreign, Commonwealth and Development Office, said exports depended on productivity. “Firms produce more per worker when they can buy inputs they cannot make at home,” he said. Pakistan Business Council chief executive Javed Kureishi said formal industry faced a trade-off: cheaper inputs but less protection for local goods, with energy prices, taxes and the cost of capital deciding competitiveness.
The carbon border tax and special interests
Trade expert Aisha Moriani said market access now depended on standards beyond tariff rates. The EU’s carbon border tax took full effect on January 1, 2026, covering steel, aluminium, cement, fertilisers, electricity and hydrogen.
Professor Adeel Malik of Oxford University said tariff policy had favoured special interest groups. Duties on their products were higher than on others, and the gap had widened over 15 years.
The debate’s central test is whether cuts in duties on industrial inputs will be matched by lower protection for finished goods. The dialogue suggested reform could be weakened by successive exceptions even without formal reversal.
The trade numbers are already moving the wrong way. Pakistan’s trade deficit widened 16 per cent to $14.6 billion in July-October, as imports grew 12.59 per cent and exports only 8.52 per cent. Exports to Europe dipped despite GSP+, and a committee has warned that GSP+ access is at risk. With short-term inflation past 12 per cent, those cost pressures are already visible in household budgets.
What is Pakistan’s average tariff?
The National Tariff Policy 2025-30 aims for an average tariff of 9.7 per cent by the 2030 fiscal year. Customs duty alone is 10.3 per cent; total duties reach 18.5 per cent.
What is the National Tariff Policy 2025-30?
It is the government’s tariff reform plan, aiming to cut duty slabs from five to four and bring the average tariff to 9.7 per cent by 2030.
How high are Pakistan’s total import duties?
Importers pay 10.3 per cent in customs duty, 3.65 per cent in additional duties and 4.57 per cent in regulatory duties, totalling 18.5 per cent.
What is the EU carbon border tax?
The EU’s carbon border tax took full effect on January 1, 2026, covering steel, aluminium, cement, fertilisers, electricity and hydrogen. Exporters must prove carbon performance through certification and traceability.
