Can Pakistan's Agriculture Absorb the 29% Tariff from the Trump Administration?

1. Introduction and Background

On April 2, 2025, U.S. President Donald Trump announced a sharp hike in tariffs on imports from ‎dozens of countries under a new "reciprocal trade" plan. In Pakistan's case, all exports to the ‎United States face a punitive 29% import tariff, cited as a response to Pakistan's supposedly high ‎barriers on U.S. goods. This unilateral move – part of a broader tariff package dubbed the "Fair ‎and Reciprocal Tariff" plan – was unprecedented in scope. It imposed a baseline 10% duty on all ‎U.S. imports worldwide, with extra penalties on specific nations; Pakistan was hit with one of the ‎highest surcharges (29%), as Trump claimed Pakistan levied 58% tariffs on American products. ‎The tariff hike took effect immediately, sending shockwaves through Pakistan's export sector.

This development must be viewed against the backdrop of Pakistan–U.S. trade ties. The United ‎States is one of Pakistan's largest export markets, accounting for about 16% of Pakistan's total ‎exports (roughly $5–5.5 billion out of $32–33 billion annually). Traditionally, Pakistan's exports to ‎the U.S. have been dominated by textiles and apparel (e.g. garments, linens), but a variety of ‎agricultural goods also reach American shores. Agricultural exports – such as rice, fruits, and ‎related products – form a significant (if smaller) share of the U.S.-bound export basket, and are ‎crucial for Pakistan's rural economy. The agriculture sector contributes ~23% of Pakistan's GDP ‎and employs 37% of the labor force. Millions of rural households depend on export-oriented crops ‎(rice, cotton, fruits, etc.) for income, meaning any disruption in overseas markets can reverberate ‎through farming communities. Even indirectly, up to 70% of Pakistan's export earnings are linked ‎to agriculture (including agro-based textiles and leather). Thus, a U.S. tariff that chokes market ‎access not only threatens immediate export revenues but also farmers' livelihoods and rural ‎employment.

For Pakistan's agricultural sector, the U.S. market has been particularly valuable for certain high-‎value products. Niche exports like basmati rice, mangoes, ethnic processed foods, and seafood ‎have found a foothold in the U.S., leveraging demand from diaspora and specialty importers. The ‎sudden imposition of a 29% duty puts these products at risk. It effectively raises the landed cost of ‎Pakistani goods in the U.S. by nearly one-third, eroding their price competitiveness overnight. ‎Given that many Pakistani agricultural exporters operate on thin margins, a tariff of this magnitude ‎could mean the difference between profit and loss – or between surviving in the U.S. market and ‎being priced out entirely. The significance extends beyond commerce: Pakistan's farming and food ‎processing jobs are on the line, and foreign exchange earnings from agriculture (vital for Pakistan's ‎external balance) could take a hit. In short, the U.S. tariff hike poses a serious challenge to ‎Pakistan's agricultural export sector, one that demands a strategic policy response. Below, we ‎analyze which products are most exposed, how trade might divert or contract, and what steps can ‎mitigate the damage.

2. Product-Level Exposure

Not all agricultural exports are equally affected – some products have much heavier reliance on the U.S. market than others. Based on recent trade data, the most exposed Pakistani agricultural exports (in terms of U.S. market dependence) include rice, mangoes, certain processed foods, and seafood. A product-by-product look:

• Rice: Pakistan is the world's 4th largest rice exporter, with $2.86 billion of rice exports in 2023 (mostly Basmati and IRRI varieties). However, the U.S. accounts for only a small share of this. In 2024, U.S. imports of Pakistani rice were about $56.8 million (roughly 2% of Pakistan's total rice export value). The American market for Pakistani rice is mostly specialty basmati for South Asian diaspora and gourmet use; bulk long-grain rice is sourced largely from elsewhere or domestically. Thus, a U.S. tariff hurts a narrow segment of Pakistan's rice sector. Exporters of premium basmati may feel the pinch (as U.S. buyers could shift to Indian basmati), but overall rice export volumes can be diverted to other countries more easily than some other products.
• Mangoes: Mango is an iconic Pakistani export fruit (Pakistan produces about 1.8 million tons of mangoes annually) and a source of pride and rural income. The U.S. market for Pakistani fresh mangoes, while constrained by strict phytosanitary rules, has grown in recent years. In fact, by 2022–23 the United States became the single largest importer of Pakistani mangoes by number of shipments (around 20% of Pakistan's mango export consignments). This reflects strong demand from North America's South Asian communities for varieties like Sindhri and Chaunsa. Losing the U.S. outlet is a serious blow – these mangoes cannot easily find an alternative market that offers similar prices. (By volume, regional markets like the Middle East and Iran buy more Pakistani mangoes, but often at lower prices and in peak glut season.) In short, roughly a fifth of Pakistan's mango export trade is tied to U.S. buyers, so the 29% tariff could sharply curtail orders for the upcoming season.
• Processed & Specialty Foods: Pakistan exports a range of processed or packaged foods – for example, spice mixes, pickled vegetables, dried fruit, confectionery, and ethnic snacks. The overall export of processed foods is modest (about $574 million in 2020 for all processed food and beverage exports) and has been volatile. Only a few Pakistani food brands have penetrated high-income markets. That said, the U.S. is a key destination for niche products serving the diaspora (such as ready-made spice blends, rice flour, and sweets). These tend to be small-volume, high-value shipments. While exact figures are small as a percentage of Pakistan's total processed food exports, U.S. and Canadian importers of these items may now scale back purchases or demand deep discounts to offset the tariff. For example, a Pakistani exporter of packaged pickles or chutney will struggle if their product suddenly costs 29% more to the American consumer. In short, processed food exporters – often small and medium enterprises – face disruption in one of their few profitable markets, though the impact in total value may be limited (since regional markets like Afghanistan and Gulf states form the bulk of Pakistan's processed food export volume).
• Seafood: Pakistan's seafood exports (fish, shrimp, etc.) were about $410 million in 2023, but almost none of this currently goes to the United States. Pakistani shrimp has effectively been banned from the U.S. since 2017 over failure to meet Turtle Excluder Device (TED) requirements. Only a few compliant firms ship small quantities. The EU also has had a ban on Pakistani seafood since 2007 on sanitary grounds. As a result, Pakistan sells its seafood to China, Southeast Asia, and the Middle East instead. Therefore, the direct impact of the U.S. tariff on seafood is minimal – simply because Pakistan had negligible access to the U.S. market even before the tariff. (One exception: any limited exports of fish fillets or other allowed products to the U.S. would now face 29% duty, effectively killing that business.) The seafood sector's exposure is indirect: losing the potential of the U.S. market until policies or compliance change. For now, this sector will be far less affected than fruits or other foods.

Thus, mangoes and certain specialty food products are the most U.S.-dependent among Pakistan's agricultural exports, whereas rice and others have a more diversified destination profile. It is important to note that textiles (Pakistan's top export to the U.S.) are outside the scope of this agricultural brief – but their decline could spill over to agriculture by reducing demand for cotton, leather, etc. The 29% tariff broadly applies to all Pakistani products, so the pain is economy-wide. However, the remainder of this analysis will focus on the agricultural domain, where rural livelihoods are directly at stake.

3. Comparative Tariff Analysis

The new U.S. tariffs don’t hit every country equally – in fact, one of the risks for Pakistan is losing competitiveness relative to other supplier countries that face lower U.S. tariffs. Under Trump’s reciprocal tariff plan, different countries have ended up with different duty rates in the U.S. market, ostensibly corresponding to how “unfair” their trade practices are. Pakistan’s 29% rate is high, especially when compared to some of its regional competitors:

• India: 26% tariff – slightly lower than Pakistan’s. President Trump singled out India for “very high” tariffs on U.S. goods, but still gave it a “discounted” reciprocal tariff of 26% on Indian exports. This means Indian agricultural products now have a marginal edge over Pakistan’s in the U.S. (a 3 percentage-point lower duty). For example, Indian basmati rice or spices face 26% U.S. import tax versus 29% for Pakistani – a small but potentially decisive difference if buyers consider substitution. India’s tariff is still steep, but Pakistan can no longer compete on equal footing in price-sensitive categories.
• Bangladesh: 37% tariff – higher than Pakistan’s. Bangladesh was hit even harder, with a 37% U.S. tariff on its goods (likely due to its own high import barriers or other U.S. grievances). This is a bit of a silver lining: Bangladeshi agricultural exports (which include tea, fish, jute products, etc.) will be even more expensive in the U.S. than Pakistan’s. So for products where Pakistan and Bangladesh compete, Pakistan won’t be undercut by Bangladeshi suppliers (since Bangladesh is even less competitive now in the U.S. market). However, Bangladesh is not a major competitor in Pakistan’s main ag export categories except possibly seafood (Bangladesh exports shrimp to the U.S., but now with a 37% tariff, U.S. buyers may avoid it).
• Vietnam: 46% tariff – much higher than Pakistan’s. Vietnam was tagged with a very severe 46% tariff, reflecting U.S. concerns about Vietnam’s trade surplus and currency practices. This drastically reduces the threat of Vietnamese competition in the U.S. for overlapping products (Vietnam is a big exporter of rice, seafood, coffee, etc.). For instance, Vietnam is one of the world’s top rice exporters and a growing mango exporter – but a 46% U.S. tariff essentially prices Vietnamese goods out of the U.S. market for now. Consequently, Pakistan doesn’t have to worry about Vietnam poaching its U.S. market share; in fact, Vietnamese suppliers will be looking to redirect their own exports elsewhere, possibly increasing competition in third markets.
• Thailand: 10% tariff – only the baseline rate. As a longstanding U.S. ally with relatively open trade, Thailand was not given an extra punitive rate. Thai exports face the universal 10% tariff (the baseline Trump applied to all countries). This is a critical point: Thailand now enjoys a much lower tariff into the U.S. than Pakistan does (10% vs 29%). In commodity rice markets, this is a major disadvantage for Pakistan. Thai jasmine rice, for example, will only be 10% pricier for U.S. importers, whereas Pakistani rice is 29% pricier. U.S. importers of Asian rice could simply buy more from Thailand (or even from other baseline-tariff countries like Cambodia or Myanmar) to avoid Pakistan’s upcharge. Similarly, Thai processed food or canned tuna, etc., become relatively cheaper than Pakistani counterparts. Thailand’s comparatively mild tariff could thus siphon off some of Pakistan’s U.S. business.
• Other countries: Key global agricultural suppliers like Brazil, Argentina, Indonesia, Mexico, and Canada also fall into the lower-tariff bracket due to either baseline rates or trade agreements. Mexico, for instance, is in USMCA (NAFTA’s successor) and its goods largely remain duty-free or low-tariff in the U.S. . This matters for mangoes – Mexico is the dominant supplier of mangoes to the U.S., and Mexican mangoes face zero tariff under the trade agreement. Pakistan’s 29% tariff makes its mangoes vastly more expensive than Mexican ones, virtually ensuring U.S. fruit importers will stick with Western Hemisphere suppliers. Similarly, Indonesia (with presumably only the 10% base tariff) can sell palm oil or seafood to the U.S. cheaper than Pakistan now. In textiles (beyond our focus), countries like Sri Lanka faced 44% and China 34% , but for agriculture the key takeaway is that some competitors have a significant tariff advantage (Thailand, Mexico, etc.).

The risk is clear: U.S. buyers will shift toward countries that were spared or given lower tariffs, whenever substitutions are possible. Importers of rice or processed foods can easily source from alternative origins if one becomes too costly. For example, a U.S. tea importer facing 29% duty on Pakistani green tea might increase orders from India or Kenya which face lower U.S. tariffs. Supermarkets looking for canned fruits could switch from Pakistani suppliers to Thai or Latin American ones. Over time, these shifts could entrench – Pakistan might lose market share permanently if buyers form new supply relationships during this tariff period.

That said, Pakistan isn’t alone in being penalized – some competing countries are also tariff-handicapped, which complicates the competitive landscape. As noted, Bangladesh and Vietnam now have even higher U.S. tariffs, so they won’t be undercutting Pakistan in the U.S. market (they’re effectively sidelined too). India’s tariff is only slightly lower, so while it has an edge, it’s not a massive gap. This means for certain products where the U.S. has penalized multiple sources (South Asian goods in general, for instance), American importers face higher costs across the board. They might simply accept higher prices (passing them to consumers) or reduce import volumes overall rather than fully replace Pakistan with another country.

What this means is Pakistan stands to lose business to those competitors with lower U.S. tariffs (notably Thailand, possibly India), while experiencing a more level playing field against competitors who were also hit hard (Bangladesh, Vietnam). The net effect for Pakistan is negative: any relative advantages it had (such as lower labor costs or closer ties with U.S. buyers) are now outweighed by a significant price penalty at U.S. ports. A simple comparison illustrates this: before, Pakistani semi-milled rice and Thai rice both faced about a 6% U.S. import duty; now, Pakistani rice is taxed 29% vs Thai 10% – a huge gap that will likely redistribute U.S. rice orders in Thailand’s favor. Similar comparisons hold for other goods. Pakistan’s policymakers must therefore assume that, for the duration of these tariffs, U.S. demand for Pakistani agricultural products will drop, either due to direct reduction or substitution by other countries.

Table: Examples of U.S. Tariffs on Competing Suppliers

Table: U.S. tariff rates after April 2025 on Pakistan and selected competitors. Countries with significantly lower tariffs than Pakistan (e.g. Thailand, Mexico) are poised to gain U.S. market share at Pakistan’s expense.

4. Possible Economic Effects

The tariff shock will ripple through Pakistan’s agricultural economy in both the short and medium ‎term. In the short-term (next 0–6 months), the most immediate effects are likely to be disruptions in ‎export flows, pricing pressures, and uncertainty for exporters. Specifically:

• Reduced U.S. Orders & Cancellations: Almost as soon as the tariffs were announced, ‎Pakistani exporters reported that U.S. clients were re-evaluating contracts. A 29% cost ‎increase is often too much to simply add on top of existing deals – importers will either ‎demand a lower FOB price or cancel shipments. For instance, a Pakistani mango exporter ‎who had negotiated a price of $10 per 4-kg box may find the U.S. buyer unwilling to pay ‎the roughly $3 extra tariff. Some shipments already en route in early April 2025 could be ‎stuck at U.S. ports, incurring demurrage, as buyers and sellers haggle over who absorbs the ‎tariff. Similarly, rice export orders scheduled for the summer might be postponed or scaled ‎down. Export volumes to the U.S. will dip immediately, as seen in other trade wars (e.g. ‎U.S.-China in 2018) where new tariffs caused a near-instant fall in shipments.
• Price Cuts and Margin Squeeze: Pakistani exporters may respond by cutting their prices ‎to keep U.S. business. This means accepting lower profit margins (or even losses) in the ‎short run. A rice miller/exporter might offer a 15-20% discount to U.S. importers to offset ‎part of the 29% tariff, hoping to share the burden and retain the client. Such price cuts, ‎however, directly reduce earnings for the exporter and ultimately the farmer. For ‎perishables like fruit, where timing is crucial, exporters might have no choice but to sell at a ‎heavy discount rather than lose the shipment entirely (a mango that isn’t sold today may ‎spoil tomorrow). This erosion of export prices will hurt rural producers – e.g. mango ‎growers might receive a much lower farmgate price per kilo if exporters know the U.S. ‎market is effectively closed or only accessible at bargain rates.
• Inventory Buildup and Shipment Delays: Companies may hold back goods that were ‎intended for the U.S., trying to find alternative buyers. Warehouses could fill up with ‎unsold stock – e.g. processed food items labeled for U.S. standards might sit idle. Fresh ‎produce that can’t be rerouted in time could simply result in wastage. There may also be ‎logistics headaches as shipping lines and freight forwarders adjust – some consignments ‎could be re-exported from U.S. ports to Canada or elsewhere if feasible, causing further ‎delays. All of this adds cost (storage, re-routing fees) and uncertainty.
• Confidence and Credit Crunch: In the immediate aftermath, the business confidence of ‎exporters is shaken. Firms that rely significantly on U.S. orders could face liquidity issues – ‎payments may not come through on time due to disputes over the tariffs, and banks might ‎grow cautious in extending trade credit to these firms. Pakistan’s financial system (already ‎stressed) could see more non-performing loans if exporters default. The government might ‎need to step in with short-term credit support (discussed later).

As time progresses to the medium-term (6–24 months), the impact will deepen, potentially altering ‎production and employment patterns:

• Export Decline and Production Cuts: If the tariff remains in place throughout the ‎upcoming seasons, we can expect a notable drop in Pakistan’s export volumes to the U.S. ‎for 2025. For example, Pakistan exported about $5.5 billion to the U.S. in FY2024 ; this ‎figure will likely shrink in FY2025, with agricultural exports taking a disproportionate hit. ‎With fewer orders coming in, producers will scale back output. Rice mills that primarily ‎packed for U.S. brands might reduce milling shifts. Mango orchards might leave more fruit ‎unharvested if export demand is soft (already, climate issues had cut mango output; now ‎lack of market will compound the issue). Over planting decisions: farmers may shift away ‎from export-oriented crops next season – e.g. some basmati rice farmers might plant other ‎crops if they fear export prices will stay depressed.
• Job Losses and Income Loss in Affected Sectors: The sectors most reliant on U.S. ‎exports will suffer employment contractions. Consider a seafood processing plant that was ‎preparing to enter the U.S. market – it may lay off workers and halt expansion plans. More ‎immediately, fruit packing houses that hired seasonal workers to grade and pack mangoes ‎for U.S. air shipments might not open at all this season, or operate at half capacity. Each ‎container of fruit or rice that is cancelled translates into fewer work-hours for laborers in ‎packaging, cold storage, transport, and shipping. Additionally, many of these jobs are in ‎rural or semi-urban areas (packhouses in mango-growing districts, rice mills in small ‎towns), so the rural workforce will feel the pain. Reduced export income can also mean ‎lower seasonal wages for farm laborers (since exporters and big farmers won’t earn as ‎much to pass on). In a country where agriculture employs over one-third of the labor force, ‎any downturn in agri-exports threatens to worsen rural underemployment and poverty.
• Rural Economic Stress: Lower export-derived income in rural communities means lower ‎spending and more hardship in those areas. A cluster of mango farmers earning less will cut ‎back on purchasing farm inputs, consumer goods, and services, affecting local shopkeepers ‎and input suppliers. This multiplier effect could be felt in regions like southern Punjab or ‎Sindh that are hubs of export crop production. Rural indebtedness might rise if farmers ‎can’t repay loans taken in anticipation of export profits. Ultimately, this could become a ‎political issue as well, with farming communities pressing the government for relief.
• Supply Chain Contraction: Pakistan’s agro-export supply chains, which include ‎transporters, processors, quality inspectors, and freight services, will see reduced activity. ‎For instance, trucking companies that move reefer containers of produce to Karachi port ‎will have fewer trips. Processing facilities (like factories that make dried mango slices or ‎pulp largely for overseas clients) might slow down operations due to order shrinkage. This ‎“downstream” effect means the entire value chain from farm to port experiences a slump. If ‎the situation persists, some firms in the chain might shut down or shift focus to the domestic ‎market, though the domestic market often cannot absorb the same quantity or offer the ‎same prices as export.
• Price Adjustments and Potential Gluts: With export avenues constrained, some products ‎will end up in greater supply domestically or in alternate markets, potentially causing gluts ‎and price depressions. For example, high-grade mangoes that would have gone to U.S. ‎supermarkets may now flood local markets or Gulf markets at lower prices. Pakistani ‎consumers could enjoy a windfall of cheaper produce in the short run, but at the cost of ‎farmers’ earnings. A glut can be seen already in anecdotal reports: exporters estimate that if ‎the U.S. does not take its usual share of Pakistani mangoes, local market prices for mango ‎during peak season could drop significantly, squeezing growers’ margins. Similarly, rice not ‎shipped to the U.S. might be sold in Africa or kept in government stocks, but excessive ‎supply in those channels might push prices downward internationally. Lower commodity ‎prices internationally mean fewer dollars earned per ton exported, compounding the ‎revenue loss.

It should be noted that some of these medium-term effects might be mitigated if exporters ‎successfully redirect goods to other markets relatively quickly (as discussed in the next section). ‎However, even with diversion, there is usually a period of adjustment where output and ‎employment dip. Moreover, the uncertainty itself – not knowing how long the U.S. tariffs will last ‎– can dampen investment. Businesses will be hesitant to invest in expanding capacity or exploring ‎the U.S. market further, which is a lost opportunity.

If the tariff regime drags into the long term, Pakistan risks permanent structural impacts: certain ‎export-oriented farming might shrink for good, and competitors might entrench themselves in ‎Pakistan’s former niches in the U.S. (for instance, if U.S. buyers find a reliable alternate source for ‎basmati rice or dried mango, they might not return to Pakistani suppliers even if tariffs are lifted ‎later). The cumulative effect is a potential step backward in Pakistan’s agricultural export ‎ambitions. The country had been trying to climb up the value chain and expand its share in high-‎end markets; an enduring tariff barrier could freeze or reverse those gains.

The analysis shows that the short-term will bring acute disruptions and financial losses, while the medium-term ‎could see sustained output reductions and job losses in export agriculture. Rural economies will ‎absorb much of the shock, with lower incomes and possible gluts. The only silver lining is that ‎some products can be diverted to other markets – but often at lower profit – which we examine ‎next. Without effective countermeasures, the tariff hike stands to deliver a significant setback to ‎Pakistan’s agri-economy, undermining hard-won progress in export growth and rural development.

5. Market Diversion and Substitution

Facing a suddenly hostile U.S. market, Pakistani exporters will be scrambling to redirect exports to ‎alternative markets. The ability to successfully divert goods will be crucial in cushioning the blow ‎from lost U.S. sales. We evaluate the prospects for market substitution for key products and the ‎potential benefits from existing trade ties outside the U.S., as well as the risks involved.

Alternate Markets & Trade Deals in Asia: Pakistan’s geographic and economic ties in Asia ‎could provide some relief. The most immediate pivot is towards China, which has already become ‎a major buyer of certain Pakistani agricultural goods. In 2023, China accounted for over 60% of ‎Pakistan’s seafood exports and increased its purchases by 13% even as overall seafood exports fell. ‎This growth was credited to improved trade relations and proactive marketing in China. Building ‎on this trend, Pakistan could try to send more rice, fruits, and other products to China. Under the ‎China-Pakistan Free Trade Agreement (Phase II), which took effect in 2020, China granted ‎Pakistan lower or zero tariffs on many items, including agricultural products. For example, certain ‎Pakistani rice and citrus fruits enjoy duty concessions in China. If Chinese importers can be ‎courted (through trade fairs and diplomacy), some of the rice originally meant for U.S. retailers ‎might find its way into Chinese supermarkets or food processing. Likewise, China’s huge ‎consumer market could potentially absorb Pakistani mangoes – China recently opened its market to ‎Pakistani mangoes after signing protocol agreements on pest control. While volumes so far have ‎been small, there is room to grow. It’s worth noting, however, that Chinese consumers are less ‎familiar with Pakistani mango varieties; sustained promotion and competitive pricing would be ‎needed.

Beyond China, other Asian markets and Muslim-majority countries present opportunities. Pakistan ‎already has a preferential trade agreement with Indonesia, under which Indonesia agreed to lower ‎tariffs on Pakistani kinnow oranges and mangoes in recent years. Pakistan can leverage this PTA to ‎push more fruit exports to Indonesia. Malaysia (with which Pakistan has an FTA) could also import ‎more Pakistani rice and maybe halal processed foods. There is also the broader Regional ‎Comprehensive Economic Partnership (RCEP) in Asia (which includes China, ASEAN, etc.) – ‎Pakistan is not a member, but it can still target those markets on MFN basis. Vietnam, Thailand, ‎and the Philippines are big rice-consuming nations; if Pakistan’s rice is price-competitive (and ‎Indian rice faces its own restrictions or higher prices), Pakistan might increase sales to those ‎countries. Indeed, in mid-2023 when India banned rice exports, Pakistan managed to nearly double ‎its rice exports by filling gaps in markets like Indonesia and the Philippines. That experience could ‎be instructive: agile exporters, with government support, can redirect volumes to wherever demand ‎exists. Similarly, for textiles (indirectly affecting agriculture via cotton demand), some diversion to ‎the EU or UK (where Pakistan has GSP+ or preferential access) could offset U.S. losses – freeing ‎up some foreign exchange to perhaps support agriculture.

Middle East and Africa: These regions have traditionally been strong markets for Pakistan’s ‎agricultural goods and could potentially absorb additional supply. Gulf countries (UAE, Saudi ‎Arabia, Oman, Qatar) are top buyers of Pakistani rice, meat, and produce. They have relatively ‎low tariffs on food (often 0–5%) and high food import needs. Pakistan already exports significant ‎quantities of basmati rice to the Gulf – for instance, the UAE and Saudi Arabia together take a ‎large chunk of Pakistani rice. If the U.S. market for basmati dries up, Pakistani exporters can offer ‎more to Gulf buyers (possibly at a slight discount to quickly gain volume). The Gulf market, while ‎sizeable, may not fully replace U.S. prices – but it’s a natural fallback given geographic proximity ‎and existing trade links. Pakistani mangoes are very popular in the Middle East as well; exporters ‎can reroute shipments there (e.g. diverting what would have gone by air to the U.S. into extra ‎flights to Dubai). Iran is another important nearby market – it was actually the largest buyer of ‎Pakistani mangoes by value in recent years and also imports substantial Pakistani rice (often ‎through barter or informal channels due to sanctions). Strengthening official trade with Iran ‎(perhaps via barter deals exchanging Pakistani rice/mangoes for Iranian commodities) could take ‎up some slack. Pakistan and Iran have discussed barter trade arrangements; now might be the time ‎to operationalize those for agriculture.

Africa offers growth potential as well. East African countries like Kenya, Tanzania, Mozambique ‎import rice – indeed, Kenya has been among the top 10 importers of Pakistani rice. West African ‎nations (Nigeria, Benin, Ghana) are huge importers of rice, traditionally buying from India, ‎Thailand, and Vietnam. If Pakistan has surplus rice and competitive prices (especially with a ‎weaker rupee after the tariff shock), it could increase its presence in African markets. There are ‎challenges: African markets are price-sensitive and often require credit facilities or government-to-‎government deals, but Pakistan’s government can explore such avenues (perhaps offering deferred ‎payment options or barter via tractors, etc.). For fruits, places like Central Asia (Kazakhstan, ‎Uzbekistan) have shown demand for Pakistani mangoes and kinnows; those could be expanded ‎with better logistics through Afghanistan. Central Asia’s volumes are not huge, but every bit helps.

Europe and Other High-End Markets: The European Union and UK remain important markets ‎for Pakistani agricultural goods – especially rice and textiles – and critically, Pakistan enjoys GSP+ ‎duty-free access to the EU for most products. This is a big advantage: EU tariffs on Pakistani rice ‎and other foods are 0% under GSP+, whereas India, for example, sometimes faces tariffs or quotas ‎in the EU (the EU imposes import duties on rice above certain quotas, but Pakistan has an ‎exemption under GSP+ for its rice). Pakistani rice has already made strong inroads in Europe ‎partly due to this duty advantage. With the U.S. off-limits, Pakistani rice exporters can intensify ‎efforts in Europe – marketing basmati to new European buyers or increasing volumes with existing ‎ones. Likewise, Pakistani processed food items (like pickles, spices) could target European ethnic ‎stores more aggressively since they face zero tariff there (quality standards are a hurdle, but more ‎on that shortly). The UK, post-Brexit, has its own GSP scheme (“Developing Countries Trading ‎Scheme”) in which Pakistan is included, so similar duty-free access largely continues. However, ‎increasing exports to Europe is easier said than done – these markets are mature and quality-‎demanding. Still, if Pakistani exporters upgrade standards, they might fill any gaps left by ‎competitors. For example, if India has a limited quota of duty-free rice in the EU and exceeds it, ‎Pakistani rice can swoop in duty-free and take the remainder. In fact, Pakistani rice exporters have ‎in the past benefited when the EU imposed punitive duties on some Indian rice due to pesticide ‎residue issues. A concerted push in Europe could offset some of the U.S. losses in value terms, ‎though possibly not fully in volume.

Domestic Absorption and Processing: Another form of “market diversion” is internal: if exports ‎truly cannot find an alternate external buyer, some produce may need to be absorbed or processed ‎domestically. This isn’t ideal from a profit standpoint, but it can prevent waste and extreme price ‎crashes. For example, excess mangoes can be processed into pulp or juice concentrate by local ‎food companies (some of which might stockpile in anticipation of future demand or even for ‎eventual export to secondary markets). Surplus rice might be bought by the government for ‎domestic food security reserves or used in aid to other countries. There is also the option of value-‎adding for local sale: e.g., turning export-quality fruits into dried fruit snacks or pulp for the local ‎market (though local purchasing power for such products is limited). In essence, Pakistan may ‎have to temporarily “consume” more of what it produces. This could mean lower prices for ‎consumers (a short-term boon for food inflation which is otherwise high), but it’s not sustainable ‎for farmers without compensation.

Risks and Limitations: Diversion to other markets, while necessary, comes with downsides. ‎Firstly, prices in alternative markets are generally lower than what niche U.S. buyers would pay. ‎The U.S. typically pays a premium for high-quality Pakistani goods (due to higher retail prices and ‎affluent diaspora consumers). Selling the same goods in, say, Afghanistan or Africa might fetch ‎substantially less revenue. So, even if volume is maintained by finding new buyers, the export ‎value (in USD earned) will likely drop. Secondly, other markets may not be able to absorb the full ‎surplus. For instance, there is a finite demand for Pakistani mangoes in the Gulf – beyond a point, ‎extra shipments will just oversupply and drop prices. Thirdly, logistical and regulatory hurdles ‎differ. Gaining access to a new market often requires meeting different health and safety standards, ‎documentation, and building distribution networks. It takes time to develop these, and the U.S. ‎tariff shock was sudden. While Pakistan can expedite efforts (with trade delegations, embassies ‎working overtime to promote exports), there could be a lag before any major diversification payoff ‎materializes.

There is also the geopolitical risk: some of the alternative markets (like EU, China) could ‎themselves have trade conditions. For example, GSP+ to the EU is conditional on Pakistan ‎meeting certain governance criteria; any slippage could end those benefits. Or if Pakistan floods a ‎market with very cheap exports, it could prompt protective measures from those countries’ local ‎producers (e.g., complaints by local farmers in Kenya or Malaysia might lead to import ‎restrictions).

Nonetheless, Pakistan does have some strategic advantages it can leverage. Its status as a leading ‎halal food producer can be marketed in Muslim countries. Existing bilateral relationships, like with ‎Gulf states, China, Turkey, Iran, can be utilized to secure government-to-government purchase ‎agreements (for example, Pakistan could ask Saudi Arabia to import more Pakistani rice as a ‎gesture of support in this tough time). Pakistan might also take advantage of any supply gaps left ‎by competitors: if, say, Vietnam’s 46% U.S. tariff leads Vietnam to pivot more to China (and away ‎from its usual markets in Southeast Asia), Pakistan can try to fill Vietnam’s place elsewhere.

Domestic price pressure is a double-edged sword: it harms producers but helps consumers. The ‎government will need to monitor domestic food prices – if, for instance, rice that was meant for ‎export causes a domestic glut and prices crash for farmers, there may be calls for price support or ‎procurement by the state. Already, Pakistani farmers are vulnerable due to high input costs; a steep ‎drop in output prices could be devastating in rural areas. On the other hand, urban consumers and ‎inflation indices benefit from lower food prices. Policymakers might attempt a balance by buying ‎up some surplus at a fixed support price to keep farmer incomes from collapsing while allowing ‎some price relief to consumers.

Market diversion is feasible to a significant extent: Pakistan can redirect a lot of its ‎agricultural exports to friendly or regional markets (Asia, Middle East, Africa). There are helpful ‎frameworks like FTAs (with China, Malaysia, Indonesia) and GSP schemes (EU, UK) that soften ‎the landing by providing low-tariff access. However, this will not be a panacea – other buyers ‎cannot fully replace the U.S. in terms of profitability. They can absorb volume, but often at lower ‎price points. The risk of oversupply and depressed prices in those alternate markets is real, ‎potentially leading to diminishing returns. Thus, while Pakistan should pursue aggressive ‎diversification of export destinations (turning the crisis into an opportunity to reduce over-reliance ‎on the U.S.), it must also prepare supportive measures for its producers during the transition. The ‎final section will outline policy recommendations to manage both the short-term fallout and the ‎longer-term repositioning of Pakistan’s agricultural exports.

6. Policy Recommendations

To mitigate the impact of the U.S. tariff shock and strengthen Pakistan’s agricultural export sector ‎for the future, a multi-pronged policy response is required. The government, along with industry ‎stakeholders, should implement measures in the short, medium, and long term as follows:

Immediate Relief and Support (Short-Term): In the coming weeks and months, the priority is to ‎help exporters fulfill orders and buffer farmers from sudden income loss. The government should ‎facilitate financial support for affected exporters – for example, expanding the State Bank’s export ‎refinancing scheme with lower interest rates, so that exporters have working capital even if ‎payments from U.S. buyers are delayed. Emergency export rebates or subsidies can be considered ‎on agricultural products destined for non-U.S. markets, effectively compensating some of the extra ‎marketing costs. For instance, if an exporter diverts goods to a less profitable market, a small ‎subsidy per unit could encourage that move. The government might also temporarily waive or ‎reduce export taxes, port charges, and certification fees for agricultural shipments, to improve cost ‎competitiveness in alternate markets. Another key step is enhancing logistics and customs ‎facilitation: streamline the process for rerouting shipments to new countries, issue rapid SPS ‎(sanitary and phytosanitary) clearances for markets that require different certifications, and ‎negotiate with shipping lines for affordable freight rates on new routes (perhaps through state ‎guarantees or volume commitments). Additionally, authorities should engage U.S. officials ‎diplomatically (even if chances are slim under the current U.S. policy) – for example, seeking ‎product-specific exemptions or delayed implementation for goods already in transit when the tariff ‎hit. Even a short grace period or quota (say, allowing a certain tonnage of Pakistani rice at the old ‎duty rate) would help ease the shock; this kind of relief may be attainable through quiet lobbying ‎highlighting that many poor farmers are hurt by the tariff. Finally, implement a “buyer ‎matchmaking” initiative via Pakistani trade missions: immediately connect Pakistani exporters with ‎importers in alternative countries who can take the goods that the U.S. won’t. Government-backed ‎trade delegations to Gulf, China, etc., in the next 1-2 months can expedite deals. On the domestic ‎front, if particular commodities risk glut (like mangoes in peak season), provincial governments ‎could step in to procure surplus at a minimum support price and distribute to schools, the military, ‎or as aid – preventing a total price crash at the farmgate.

Diversification and Competitiveness Strategy (Medium-Term): Over the next 1–2 years, ‎Pakistan needs to adapt its trade strategy to reduce vulnerability and meet the demands of non-U.S. ‎markets. A core element should be aggressive trade diplomacy in regions like Asia, Africa, and the ‎Middle East. The government should fast-track ongoing negotiations for market access – for ‎example, conclude the pending Pakistan–GCC Free Trade Agreement (dormant for years) to ‎secure lower duties for Pakistani food products in Saudi Arabia, UAE, etc. Similarly, pursue new ‎preferential trade arrangements with countries like Turkey (which recently signed a Trade in Goods ‎agreement with Pakistan), Iran (to formalize barter trade for rice and fruits), and even ‎Russia/Central Asia to open their markets for Pakistani agricultural goods. Trade promotion ‎organizations (like TDAP) should organize exhibitions and B2B meetings focusing on Pakistan’s ‎agri-products in target countries – essentially, take the mangoes, rice, and kinnows on roadshows to ‎drum up demand elsewhere. Another crucial medium-term goal is upgrading product quality and ‎compliance to meet stringent standards of high-value markets. One reason Pakistan has been over-‎reliant on a few markets is that many exporters struggle to meet EU/US phyto-sanitary standards or ‎packaging norms. Investment should be poured into modernizing packhouses, fumigation and ‎irradiation facilities for fruits, and certifying farms for good agricultural practices. For example, ‎establishing irradiation centers for mangoes can enable exports to places like Australia or expand ‎EU access (as Western countries demand advanced treatment beyond basic hot water washing – ‎currently “mangoes are just washed in warm water and packed…when Western countries require ‎advanced treatment like irradiation”, a Pakistani analyst noted ). The government could subsidize ‎the cost of such treatments or facilitate public-private partnerships to build needed infrastructure. ‎Improving cold chain and logistics is also key – reefer transport, quality control labs, and cargo ‎space allocation at airports should be enhanced to ensure produce reaches new markets in top ‎condition.

Furthermore, Pakistan should capitalize on its competitive niches: for instance, intensify branding ‎of its basmati rice in the Middle East and Europe as a premium product (to sustain demand despite ‎Indian competition). The Rice Exporters Association (REAP) and government can collaborate on a ‎marketing campaign highlighting Pakistani basmati’s unique aroma and quality, to keep buyers ‎loyal. Government support for marketing and brand development (through matching grants or ‎marketing assistance) can help smaller exporters penetrate new supermarkets abroad. On the policy ‎side, maintaining a stable and realistic exchange rate will be important; the rupee’s depreciation has ‎made Pakistani goods cheaper, which can be an advantage in new markets – this should be ‎leveraged by avoiding artificially propping up the currency. Additionally, streamlining regulatory ‎hurdles at home will improve agility: simplify the procedure for exporters to get rebates when they ‎enter new markets, and ensure quality certification agencies (like Pakistan Standards, Plant ‎Protection departments) are responsive and quick, so that no opportunity is lost due to bureaucratic ‎delay.

Resilience and Value Addition (Long-Term): In the long run, Pakistan must reduce its exposure ‎to any single market and climb up the value chain to cushion against price shocks. A key ‎recommendation is to diversify the export base – both in terms of products and destinations – as a ‎matter of policy. This means investing in emerging export crops and processed goods. For ‎example, Pakistan could encourage cultivation and export of high-value horticultural products ‎(such as avocados, cherries, floriculture) which have demand in regional markets and are not ‎currently major export items. Broadening the product range spreads risk. Similarly, explore new ‎markets that are growing: countries in East Asia (South Korea, Japan) where Pakistan currently ‎exports little in agriculture could be courted via free trade deals or at least targeted marketing. Even ‎within Africa and Central Asia, countries where Pakistan has minimal presence should be studied ‎for potential (market research on consumer preferences and import needs, possibly funded by the ‎government as a public good for exporters).

Encouraging value addition and agro-processing will create a more resilient export sector. Instead ‎of exporting mostly raw or minimally processed commodities (which are easy to replace), Pakistan ‎should aim to export branded products and higher-value items. For instance, rather than just ‎exporting raw mangoes, promote the export of mango pulp, canned mango slices, or dried mango ‎– items that have longer shelf life and can create brand loyalty. Similarly, develop branded rice ‎products (ready-to-cook flavored rice packs, etc.) so that end consumers recognize Pakistani ‎brands. The government can incentivize this by offering tax breaks or grants for food processing ‎units, and by establishing food technology parks where processors get shared facilities. Over time, ‎moving up the value chain means Pakistan isn’t just competing on lowest price (where a tariff can ‎immediately wipe out the advantage), but on unique qualities and brands that consumers might pay ‎a premium for.

In addition, build strong export market intelligence and risk management capacity. The tariff ‎shock illustrates that Pakistan needs early warning systems for trade policy shifts. The Ministry of ‎Commerce and Foreign Affairs should institutionalize a mechanism to monitor trade developments ‎in key partner countries (like the U.S.) and develop contingency plans. Engaging in international ‎trade forums (WTO, etc.) to advocate against protectionism is also part of long-term strategy – ‎while immediate relief via WTO dispute is unlikely (and Pakistan might not want to antagonize the ‎U.S.), being part of coalitions that promote fair trading rules can help in the long run. Domestically, ‎insurance schemes or safety nets for exporters/farmers could be introduced. For example, a form of ‎export credit insurance that pays out if a sudden policy change in a destination market causes ‎losses. This could be run via state-owned insurers or a public fund.

Trade Diplomacy and Alliances: On the geopolitical front, Pakistan should coordinate with other ‎affected countries to respond to the U.S. tariffs. Collective representation via forums like the WTO, ‎or even approaching the U.S. as a group (for instance, a coalition of Bangladesh, Vietnam, ‎Pakistan, etc.) might carry more weight in negotiation to reduce these tariffs. While the U.S. move ‎is a challenge to WTO rules (most-favored-nation principle), a legal challenge might be slow; ‎however, joining any WTO case launched (perhaps by the EU or China against the U.S. tariffs) ‎could be worthwhile. Additionally, Pakistan should actively engage in any regional trade blocs – ‎for example, exploring membership in the Regional Comprehensive Economic Partnership ‎(RCEP) or deepening ties in the Economic Cooperation Organization (ECO) – to lock in ‎alternative trade relationships.

Finally, it’s critical to reduce over-reliance on the U.S. market structurally. This episode could ‎be a catalyst for Pakistan to strengthen South-South trade linkages and not put “all eggs in one ‎basket”. The government should facilitate exporters in maintaining a diverse client portfolio. One ‎idea is to develop a trade promotion program that specifically rewards companies for entering, say, ‎three new markets within a period, or achieving a certain spread of export destinations. This ‎incentivizes firms to always have alternatives and not focus exclusively on one big buyer country. ‎Pakistan has learned that even “friendly” trade relationships can turn protectionist; hence resilience ‎lies in diversification.

The policy response must be holistic: short-term emergency actions to save the current export ‎season, medium-term adjustments to reorient and upgrade Pakistan’s exports, and long-term ‎reforms to emerge stronger and less vulnerable. By providing immediate relief (financial and ‎logistical), Pakistan can prevent a collapse of export activities this year. By actively diversifying ‎markets and improving standards in the medium term, it can regain and even expand its global ‎market share in other regions, partly compensating for the U.S. loss. And by focusing on value ‎addition, market research, and risk diversification in the long term, Pakistan’s agricultural export ‎sector can become more robust – ensuring that the livelihood of its farmers and the health of its ‎export economy are not again jeopardized by a single country’s trade policy.

Ultimately, turning this crisis into an opportunity will require coordination between government ‎bodies (Commerce, Agriculture, Finance), export industry groups, and foreign partners. With the ‎right measures, Pakistan can not only blunt the impact of the U.S. tariffs but also set the stage for ‎more sustainable export growth that is less contingent on any one market and more based on the ‎intrinsic strength of Pakistani agriculture and entrepreneurship.