Islamabad – Pakistan is facing a complex diplomatic and economic dilemma after the United States announced punitive tariffs on countries maintaining trade ties with Iran, leaving Islamabad with limited room to manoeuvre amid already fragile economic conditions.
The new US measure, which threatens additional tariffs on nations engaged in commerce with Iran, has raised concerns within Pakistani policy and trade circles. Analysts warn that Pakistan’s scope to bypass or dilute the impact of the move is extremely narrow, as any misstep could expose its exports to punitive action in key international markets, particularly the United States.
Pakistan maintains longstanding commercial links with Iran, including cross-border trade that supports local economies and helps meet energy and commodity needs. However, experts note that continuing such trade at existing levels could place Pakistan at risk of economic penalties, at a time when foreign exchange reserves remain under pressure and export growth is a top priority.
Officials and economists say alternatives such as barter arrangements, local-currency trade or informal mechanisms offer only limited relief and come with legal, financial and transparency risks. Moreover, such routes may not provide the scale or stability needed to sustain meaningful bilateral trade without attracting international scrutiny.
The situation has sparked debate within government circles over how to balance regional economic cooperation with broader strategic and financial interests. Scaling back trade with Iran could strain ties with a key neighbour and disrupt border economies, while continuing engagement may complicate relations with Washington and jeopardise access to vital export markets.
Observers point out that Pakistan’s challenge reflects a wider global trend, where major powers increasingly use trade and tariffs as tools of foreign policy. For countries like Pakistan, this creates difficult choices between maintaining sovereign economic relationships and protecting national economic stability.
As deliberations continue, no clear policy direction has yet been announced. However, analysts agree that whatever course Islamabad adopts, the decision will have significant implications for Pakistan’s trade policy, regional diplomacy and economic outlook in the months ahead.
This story has been reported by PakTribune. All rights reserved.