Diverging Fortunes for India and Pakistan Under New U.S. Tariff Policy

The United States' new tariff policy has brought contrasting outcomes for South Asia’s two long-time rivals—India and Pakistan. While India, often labeled a "close ally," faces a tariff hike to 25%, Pakistan sees its tariffs reduced to 19%, along with promises of increased U.S. investment.

The decision has sparked concern and frustration among Indian businesses, particularly in the garment and jewelry sectors. Many manufacturers report halted production and rising fears of job losses among workers.

“We were expecting tariffs to go up to 20% at most,” said one Indian entrepreneur. “That would have still allowed us to compete with countries like China, Bangladesh, and Vietnam. But this increase makes things even harder.”

On the other hand, the trade adjustments appear to mark a new chapter for Pakistan. Economists and business leaders in the country view the tariff relief and incoming investments—especially in energy, technology, and minerals—as a significant boost to Pakistan’s struggling economy.

“This is more than just a trade agreement,” said a Pakistani business owner. “It opens the door for deeper investment ties between the two countries.”

Analysts suggest that while Pakistan is strengthening its economic ties with Washington, India may now need to focus on expanding its domestic market to offset the impact of higher U.S. tariffs and maintain its global competitiveness.