Pakistan’s tariff policy suffers from a persistent anti-export bias. High and inconsistent tariffs on imported inputs raise production costs, distort incentives, and make exporting less attractive than selling into a protected domestic market.

The result: inefficiency, stagnating exports, and lost consumer welfare.

Complex tariff structures, regulatory duties, and selective exemptions further reinforce rent-seeking and misallocation of resources. With protectionism costing the economy an estimated Rs1.77 trillion annually, meaningful tariff reform is urgent. Rationalising the structure — lowering input tariffs, simplifying slabs, and phasing out arbitrary duties — is essential to unleash Pakistan’s export potential and shift to a competitive, outward-orientated economy.

Pakistan’s tariff system has long suffered from an “anti-export bias”. High import tariffs, levied mainly for revenue or to shelter domestic industries, make imported inputs artificially expensive and domestic prices artificially high. This raises costs for exporters and reduces incentives for export, while increasing incentives for import substitution.

In effect, domestic producers can sell into a protected home market rather than compete abroad. But in doing so, it penalises exporters and consumers alike, distorts resource allocation, and impedes Pakistan’s integration into global markets.

High tariffs raise the cost of imported inputs — especially raw materials and intermediate goods — used by domestic........

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