ABSTRACT

This study examines the economic challenges arising from tariff policies affecting Pakistan’s key export sectors. Using a computable general equilibrium model, the research simulates the impact of varying tariff rates on sectors such as textiles, leather, metals, manufacturing, plastic, minerals, processed food, vegetables, and animal products. The analysis focuses on how tariff changes influence Pakistan’s exports to the USA, UAE, and China. The findings reveal that tariff increases lead to declines in major export sectors, adversely affecting market prices and industrial output. In contrast, reducing tariffs enhances export competitiveness, though the effects vary by industry. The study recommends reducing tariffs, particularly on raw materials and intermediate goods critical to export-oriented sectors, to lower production costs and improve competitiveness in global markets. A key insight is that Pakistan’s reliance on import-stage taxes, including Additional Customs Duty, Regulatory Duty, Sales Tax, and Withholding Tax, poses significant challenges for the major export sector. These taxes, primarily imposed for revenue generation, lack strategic trade policy objectives. The study suggests policymakers reevaluate these policies to support Pakistan’s export growth better.