Trade Winds Shift as East Leads the Way

As the global order continues to shift under the weight of rising protectionism and unpredictable economic leadership, the strategic partnership between Pakistan and China stands as a resilient and promising alliance. While the United States under President Donald Trump has reintroduced aggressive tariff regimes that risk destabilizing international markets, nations like Pakistan and China are seeking to carve out a more stable and cooperative future. This emerging reality underscores the growing importance of South-South alliances, particularly in a multipolar world where unilateralism from major powers has proven disruptive.

Trump’s proposed blanket 10% tariff on all U.S. imports, and a staggering 145% on Chinese goods, is seen as a radical departure from global norms of free trade. While the intention is to bolster American manufacturing and reduce trade deficits, economists warn that such tariffs will likely trigger inflation, reduce consumer purchasing power, and potentially push the U.S. economy into recession. These fears are not unfounded. Bond and stock markets have responded with sharp volatility, and historical patterns suggest that such broad-based tariff hikes can dampen both domestic and global growth. In the face of this volatility, countries are being forced to rethink their economic dependencies on the U.S.

For Pakistan, the impact of US tariffs presents both a challenge and an opportunity. The Pakistan Institute of Development Economics (PIDE) projects that U.S. tariffs could reduce Pakistan’s exports by as much as $1.4 billion, assuming a 29% average tariff rate. While this poses a serious short-term hurdle, it also pushes Pakistan to diversify its trade partners and strengthen regional economic frameworks, most notably its relationship with China. Rather than relying solely on volatile Western markets, Pakistan has a golden opportunity to deepen its trade integration with China and other Asian economies.

China, in contrast to the inward-looking posture of the U.S., continues to champion globalization and international cooperation. Its Belt and Road Initiative (BRI), with the China-Pakistan Economic Corridor (CPEC) as a flagship component, exemplifies how infrastructure investment and regional trade integration can be leveraged for mutual growth. CPEC has already brought substantial benefits to Pakistan, including new energy projects, road networks, and port development, laying the foundation for long-term industrialization and connectivity.

In times when multilateral institutions such as the IMF and World Bank are under strain and losing credibility due to their increasingly transactional nature, Pakistan’s reliance on China becomes even more significant. Historically, Pakistan has had to resort to over ten IMF bailouts since 1988, often accompanied by strict austerity measures that stifle growth. As Western financial support becomes more uncertain under leaders like Trump who favor a more isolationist and transactional approach, long-term economic sustainability for Pakistan lies in building autonomous, resilient partnerships.

China’s reliability in this regard cannot be understated. Amid global uncertainty, Beijing has remained committed to funding key infrastructure in Pakistan and has not tied its support to politically motivated conditions. While Western countries increasingly weaponize financial systems for geopolitical leverage, China offers a pragmatic alternative, one based on mutual development and strategic cooperation. This is not just an economic strategy but a geopolitical alignment that insulates both countries from Western unpredictability.

Furthermore, the broader global sentiment seems to be shifting away from the post-World War II economic order that enabled American dominance. Trump’s erratic decisions, from threatening NATO withdrawal to exiting the WHO and potentially challenging the legitimacy of institutions like the WTO and IMF, signal a decline in U.S. reliability on the world stage. For countries like Pakistan, this necessitates a pivot towards more dependable partners who are aligned with their developmental and strategic interests.

Critics often point to China’s authoritarianism or debt diplomacy, but these critiques often ignore the agency of partner countries like Pakistan, which engage with China on terms that benefit their national interest. CPEC, for example, has significantly alleviated Pakistan’s energy shortages and created jobs, offering tangible benefits in a way that conditional Western aid seldom has.

The rise of protectionism in the West, especially the United States, presents serious economic challenges, but also opportunities for countries like Pakistan and China to strengthen their bilateral ties and regional influence. In a world where the traditional anchors of the global economy are drifting, their partnership serves as a model for how nations can collaborate for shared prosperity, rather than being held hostage by the political whims of distant superpowers.