Trade War Benefit,The ongoing US-China trade war has caused disruptions globally. However, it also presents significant trade war benefits for emerging economies like Pakistan. The US imposed its first round of tariffs in 2018, aiming to reduce its trade deficit with China. This action briefly succeeded after Beijing promised to import more soybeans. Yet, over time, the trade imbalance widened again.

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Trade War Benefits: Vietnam’s Success Story

Vietnam provides a great example of how a country can benefit from trade conflicts. Since 2018, many Chinese firms have relocated their manufacturing to Vietnam. These firms wanted to rebrand Chinese-made products as Vietnamese. Although Vietnam still used Chinese inputs, its industries added real value before exporting the goods. This was not simple trade rerouting but a model of industrial value addition.

Recently, China and Vietnam signed over 40 agreements covering infrastructure and production. This makes sense because Vietnam is China’s fourth-largest trading partner and leads the ASEAN bloc under the Asean-China Free Trade Area (ACFTA) and Regional Comprehensive Economic Partnership (RCEP). Thanks to these partnerships, Vietnam saw a 14% rise in exports in 2024, surpassing $400 billion.

Opportunity for Pakistan

Pakistan can follow a similar path. It already has a free trade agreement with China and controls the duty-free Gwadar Port. Gwadar’s Special Economic Zone has investor-friendly policies, offering the potential to attract parallel imports like electronics and luxury goods. However, Pakistan must upgrade its logistics and shipping to seize this opportunity.

If Pakistan fails to act, other regions like Singapore, Hong Kong, or Vietnam could dominate. Hong Kong is especially favored due to its yuan-based economy, helping China avoid tariffs and export to the US indirectly. Pakistan must act quickly and propose a solid business case to Chinese investors to develop Gwadar as a regional hub.

Trade War Benefits: What Pakistan Must Do

Pakistan should embrace foreign investment through a joint venture (JV) model. This model must include requirements for technology transfer and intellectual property (IP) sharing. Products should be export-only for five years. Pakistan can learn from the EU’s EV battery rules, which require foreign firms to share IP to receive grants.

In addition, Pakistan can explore rare earth mining for US export. It can also import rare earth rocks from China and process them locally. However, the environmental cost must be assessed carefully.

Pakistan must act by July 8, 2025, to finalize its strategy and avoid US tariff re-impositions. With a strong policy framework, Pakistan can turn this trade conflict into a national opportunity.

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