The recent trade agreement between the United States and India, finalized on February 2, 2026, has sent ripples throughout South Asia, with one particular number sparking considerable reaction in Pakistan. While the deal promises to reshape the economic landscape for both the US and India, its implications for Pakistan, and the region as a whole, are complex and potentially challenging.

The core of the agreement lies in the reduction of reciprocal tariffs to 18% from a previous 50%. This immediately gives Indian exporters a significant advantage in the US market. For Pakistan, already grappling with economic instability, this tariff shift is more than just a trade statistic; it's a potential blow to its export competitiveness.

The specific number that has caused concern is the 18% tariff now applied to Indian goods entering the US. While seemingly a boon for India, it comparatively disadvantages Pakistan, whose exporters will face a higher effective tariff rate in the US market. This difference, though seemingly small, can have a significant impact on industries with tight margins.

Several Pakistani industries are particularly vulnerable. Sectors like bed linen and cotton products, where Pakistan has a strong export presence, are now at risk of losing ground to Indian competitors. These are labor-intensive industries, vital for Pakistan's economy and employment. A loss of competitiveness in these sectors could exacerbate existing economic challenges.

The impact extends beyond Pakistan alone. Bangladesh and Sri Lanka also face similar risks, particularly in sectors like garments and apparel. The India-US trade deal could trigger a broader shift in regional trade dynamics, potentially reinforcing India's position as the dominant supplier to the US market.

It's important to note that India's neighbors, including Pakistan, benefit from the US's Generalized System of Preferences (GSP), which facilitates duty-free entry for selected goods from developing countries. However, India was removed from this list in 2019.

Some analysts suggest that Pakistan had been strategically positioning itself to strengthen ties with the US, particularly amidst previous strains in the US-India relationship. This included demonstrating a willingness to cooperate on issues ranging from counterterrorism to critical minerals. The India-US trade deal, therefore, could be seen as a setback to these efforts.

The long-term implications of this trade deal remain to be seen. While the 18% tariff is undoubtedly a cause for concern in Pakistan, it's crucial to recognize that trade dynamics are influenced by a multitude of factors, including product quality, logistics, and overall economic policies. Pakistan's response to this challenge will likely involve efforts to enhance its own competitiveness, diversify its export markets, and potentially seek new trade arrangements.