The federal government has approved the National Tariff Policy (NTP) 2025–30, a transformative step toward trade liberalization. If implemented as planned—reducing the maximum customs duty (CD) to 15 percent and phasing out additional customs duty (ACD) and regulatory duty (RD) within four to five years—this could be Pakistan’s most significant trade reform to date.

The policy aims to dismantle the rent-seeking model that many industries rely on, enabling Pakistani firms to integrate into global value chains and ensuring only competitive players survive. Economic theory suggests that import tariffs create an anti-export bias, a claim supported by empirical evidence. In economies that lowered import tariffs, trade volumes grew, trade balances improved, and GDP and employment saw positive impacts.

However, no reform succeeds in isolation. The broader ecosystem must support it, with buffers to mitigate initial shocks. Reduced tax revenues, temporary job losses, and industry closures may occur as imports replace domestic production. Export growth will require time and investment, necessitating contingency plans during the transition.

Pakistan’s trade........

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