The United States Trade Representative (USTR) has released its 2025 National Trade Estimate Report, pointing to Pakistan’s internet restrictions, trade policies, and corruption as major barriers to commercial operations. The report, which outlines significant foreign trade barriers, specifically affects US exports, foreign investment, and e-commerce.
The USTR report, issued ahead of the Trump administration’s decision to implement reciprocal tariffs, includes Pakistan in a series of nations facing increased trade challenges. President Trump’s administration previously imposed a 29% tariff on Pakistani imports, which, combined with a 10% baseline tariff, raised the total tariff on Pakistani goods to 39%. This move was in response to the US claiming that Pakistan imposed a 58% tariff on US exports.
The USTR report categorizes barriers into several segments, including import policies, technical barriers, service barriers, and electronic commerce. Among the key issues, the report highlights Pakistan’s routine blocking of internet services that host content deemed blasphemous or immoral, or that may undermine national security.
Under the Prevention of Electronic Crimes Act (Peca), Pakistan has regularly blocked social media platforms or demanded that sites geo-block posts considered unlawful. The report further noted that proposed legislation, such as the e-Safety Bill and the Digital Rights Protection Authority, could impose harsher financial and criminal penalties related to online speech.
The USTR also raised concerns about Pakistan’s suspensions of mobile data and online services in response to protests and demonstrations. These actions, the report states, not only limit access to information but also hinder trade in the digital economy, disrupting business operations and services.
US businesses operating in Pakistan have expressed concerns about high tariffs, particularly on automobiles and finished goods, and additional duties. The report also mentioned challenges like non-uniform customs valuation, excessive paperwork, and penalties stemming from outdated invoicing rules.
The report further noted that US exporters face difficulties with Customs Rules 389 and 391, which impose stringent documentation requirements on shipments, creating compliance issues for businesses using intermediaries or storing goods during transit.
Foreign exchange restrictions and bureaucratic hurdles are also significant challenges for US companies in Pakistan, particularly in repatriating profits and dividends. While the situation improved in 2024 as Pakistan’s financial position stabilized, the report indicated that the government’s focus on curbing US dollar outflows remains a barrier.
Additionally, US businesses have reported increased pressure from Pakistan’s Federal Board of Revenue (FBR) to prepay taxes, while many local competitors avoid taxes or engage in tax evasion. The report stressed that the US government continues to push Pakistan for fairer tax practices and an expanded tax base.
Pakistan also remains on the US Special 301 Watch List for weak intellectual property enforcement, with rising counterfeiting and inconsistent decisions from intellectual property tribunals. Despite some progress in IP coordination and law updates, significant concerns about enforcement remain.
Lastly, the report touched on technical barriers in Pakistan’s packaging and labeling requirements for imported food products, especially vegetable oils. Stringent halal certification and shelf-life rules have created operational challenges for US exporters.
The report concluded by pointing out that corruption and a weak judicial system further dissuade foreign investment in Pakistan.
