USTR proposes new tariff regime; Pakistan set for 10% levy

June 04, 2026 (MLN): The US Trade Representative (USTR) has proposed a new tariff regime of 10% to 12.5% targeting 60 trading partners that fail to enforce a forced-labor import prohibition regime.

This declaration comes just ahead of the expiry of a temporary 150-day global tariff, which is set to lapse on July 24, 2026, following a Supreme Court ruling that annulled previous reciprocal tariffs, according to JS Global.

Under the new measure, 16 countries, including Pakistan, Bangladesh, Canada, Mexico, the UK, and the EU, will face a 10% levy.

Meanwhile, 44 other economies, including major competitors like China and India, will face a steeper 12.5% import tariff. Despite these changes, market analysts project a neutral overall impact on Pakistan’s key textile export sector.

The neutral outlook for Pakistan stems from several mitigating operational factors. First, Pakistani exports are already subject to a 10% global tariff, meaning the incoming post-July 2026 rates represent no net increase.

Furthermore, six of the 16 nations facing the lower tariff including Pakistan have already established a forced-labor import prohibition framework.

Because major Pakistani exporters are already aligned with international human rights, welfare, and environmental standards to maintain their EU GSP+ status, stakeholders expect favorable outcomes during the upcoming US public hearings starting July 7, 2026.

Additionally, Pakistan stands to benefit from proposed tariff reliefs for utilizing US-imported textile inputs, alongside an improving broader outlook for US-Pakistan bilateral relations.

The US remains a critical trade partner, accounting for 20% of Pakistan’s total exports during 10MFY26.

The textile sector remains the primary engine, driving 57% of total national exports, with a quarter of those shipments going directly to the US.

While geopolitical uncertainties and shifting tariff environments led to a general 5.4% year-over-year decline in total Pakistani exports during 10MFY26, outbound shipments specifically targeting the US bucked the trend, growing by 1.7% to reach $5.12 billion.

Certain domestic companies bear higher operational stakes due to their significant revenue exposure to the US market, as illustrated in the corporate data and the accompanying.

Feroz 1888 Mills (FML), Interloop Limited (ILP), and Gul Ahmed Textile Mills (GATM) maintain the highest exposure among their peers, deriving 68%, 45%, and 32% of their respective FY25 core revenues from US exports.

In response to the persistent tariff policy shifts originating since April 2025, most of these large-scale textile manufacturers have actively begun diversifying their geographic footprints to mitigate single-market risk.

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