Beyond globalisation

The US has thrown a spanner in the works of global trade by rolling out protectionist policies under the guise of economic emergency. With the sudden closure of USAID and the imposition of exorbitant tariffs—most notably a 125% tariff on Chinese imports—Washington has effectively declared a trade war. This policy, which bypasses congressional procedures and WTO rules, has set off a ripple effect in the global economy, hurting export-reliant countries and unsettling financial markets. Countries like China, Mexico, and Canada—America’s top suppliers—now face major economic headwinds. This shift, largely driven by a desire to curtail China’s market power and secure American corporate interests, may backfire in the long run, as history shows protectionist measures rarely deliver sustained economic growth or job creation.

For Pakistan, the writing is on the wall. With dwindling US economic aid and a deteriorating export climate, the country is stuck between a rock and a hard place. Its failure to reform its economic structure over the past decades has now left it unarmed in this new trade reality. As traditional lifelines like concessional aid vanish, and US consumer demand dips, Pakistan’s economy stands to bear the brunt. Any gains from the pressure on regional competitors like India or Vietnam seem unlikely unless Pakistan undertakes serious economic overhauls. The only way forward lies in diversifying trade partners, improving competitiveness, and making private enterprise the engine of growth. With Trump’s tariffs ushering in a new global economic order, Pakistan must rethink its diplomatic playbook—moving from political lobbying to economic value delivery.

Overview:

The article captures a seismic shift in global trade dynamics triggered by US protectionist policies. It unpacks the closure of USAID, tariff escalations particularly targeting China, and the broader implications for global trade and developing economies like Pakistan. The author highlights the risks for Pakistan in relying on outdated economic models and urges structural reforms to stay afloat in a rapidly evolving global market.

NOTES:

This article provides important observations into evolving international trade patterns and power politics. The analysis can be used in Pakistan Affairs and Current Affairs papers to highlight Pakistan’s strategic choices amid shifting global alliances. The policy shift away from aid-based diplomacy to value-driven trade partnerships makes it a potent reference when discussing foreign policy tools and economic reforms in Pakistan. The figures cited, such as the $72bn aid freeze and $582bn US-China trade, provide concrete data to enrich exam answers.

Relevant CSS syllabus topics:

• Pakistan Affairs (Pakistan-US Relations, Economic Development)
• International Relations (Trade Wars, Economic Diplomacy)
• Current Affairs (US Foreign Policy, Globalization Trends)
• International Political Economy (Protectionism, Global Value Chains)

Notes for beginners:

The US government under President Trump has introduced high tariffs, especially on Chinese goods, to reduce its trade deficit and protect American industries. For example, a 125% tax was slapped on Chinese imports, causing China to retaliate. Such a trade war means countries that depend on selling goods to the US, like Pakistan, may suffer losses as American buyers pull back. At the same time, the US shut down USAID—a body that had supported developing countries with financial aid for decades. Pakistan had received around $67 billion in aid since 1951, including the famous Kerry-Lugar-Berman bill in 2009 that provided $7.5 billion over five years. Now that this support is drying up, Pakistan must find new ways to grow—by improving its industries, making products that other countries want to buy, and trading with regions beyond the US and China.

Facts and figures:

• $72 billion US foreign assistance frozen
• USAID, a 65-year-old aid agency, shut down
• US-China bilateral trade dropped from $661.5bn (2018) to $582bn (2024)
• Pakistan received $67bn in US aid (1951–2011)
• Kerry-Lugar-Berman Act: $7.5bn from 2010–2014
• China hit with 125% tariff; its share of US exports dropped from 19.2% to 14.7%
• Pakistan’s exports to the US: $5.2bn

To wrap up, This article paints a stark picture of a world drifting away from globalization toward fragmented economic blocs. It signals a wake-up call for developing countries like Pakistan to shift gears—steering away from aid dependence and diplomatic handouts towards real economic strength built on competitiveness and smart trade alliances. As the dust settles from this tariff war, only those nations with clear vision and internal reforms will weather the storm.

Difficult words and meanings:

• Tariff – a tax imposed on imported goods (Synonym: duty, tax; Antonym: subsidy)
• Protectionism – policy of protecting domestic industries by restricting foreign competition (Synonym: isolationism; Antonym: free trade)
• Concessional – offered on better-than-market terms, often at lower interest or conditions (Synonym: discounted; Antonym: premium)
• Bilateral – involving two parties, especially countries (Synonym: mutual; Antonym: multilateral)
• Diversification – spreading investment or trade across various sectors or partners (Synonym: expansion; Antonym: concentration)