Finance & Digital Economy | June 2026 | 4 min read
⚡ Quick Takeaways
- Pakistan wants to cut its overall average tariff from 20.19% to 9.70% over five years.
- Customs duty slabs are planned to move toward 0%, 5%, 10% and 15%.
- Additional customs duties may be eliminated in four years under the new policy path.
- Regulatory duties are expected to be capped and then phased out by the terminal year.
- The reform may reduce short-term revenue but lower costs for businesses and consumers.
Pakistan is preparing a major tariff reset that could change how imported goods, raw materials and industrial inputs are priced across the economy. The proposed National Tariff Policy 2025-30 aims to reduce high import duties in phases, making trade cheaper while pushing local businesses toward stronger competition.
|
20.19% |
9.70% Five-year target |
15% |
Why the Tariff Policy Matters for Businesses
The federal government plans to reduce import taxes under the National Tariff Policy 2025-30, a five-year framework designed to simplify Pakistan’s duty structure. The policy targets customs duties, additional customs duties and regulatory duties, which together raise the final landed cost of many imported items.
At present, Pakistan’s overall average tariff is estimated at 20.19 percent when customs duty, additional customs duty and regulatory duty are counted together. Under the proposed path, this average is targeted to fall to 9.70 percent by the terminal year of the policy. That is why the change is being described as one of the country’s most important trade-cost reforms in years.
For businesses, lower tariffs can reduce the cost of imported raw materials, machinery, spare parts and intermediate goods. This can help manufacturers price products more competitively, especially in sectors that rely on imported inputs. For consumers, the benefit may appear gradually through lower production costs and stronger market competition, although the final impact will depend on exchange rates, taxes, margins and supply-chain conditions.
Major Duty Cuts Planned Over Five Years
The policy proposes a phased reduction instead of an immediate overnight cut. This approach gives the government time to manage revenue pressure while giving industries a clearer view of future import costs. The maximum customs duty is planned to be capped at 15 percent within five years.
Additional customs duties, which can currently reach up to 6 percent on some imports, are planned for gradual elimination. Regulatory duties are expected to be limited to 20 percent before being phased out. The tariff structure will also be simplified into fewer customs duty slabs, making it easier for importers, manufacturers and tax officials to understand and apply rates.
The government expects a revenue impact of around Rs. 143 billion. However, supporters of the policy argue that lower duties can increase formal trade, reduce incentives for under-invoicing, support industry, and improve overall economic activity. In the longer run, the government may recover part of the loss through higher volumes, better compliance and broader economic growth.
What Changes Under the Proposed Tariff Framework
The core idea is to move Pakistan away from a heavily revenue-focused tariff regime and toward a trade policy tool that supports industrial growth. The Ministry of Commerce has stated that the policy is meant to create a predictable and investment-friendly tariff structure while improving access to imported raw materials.
| Tariff Area | Current Position | Proposed Direction | Likely Effect |
| Overall average tariff | 20.19% | Targeted at 9.70% by Year V | Lower trade cost |
| Customs duty | Multiple slabs and higher rates | Four slabs: 0%, 5%, 10%, 15% | Simpler structure |
| Additional customs duty | Up to 6% on some imports | Gradual elimination in four years | Cost relief |
| Regulatory duty | Applied on several import lines | Cap then phase-out by Year V | More predictable pricing |
| Revenue impact | Estimated loss for government | Around Rs. 143 billion | Fiscal pressure |
| Policy Watch: The proposed cuts can reduce input costs, but the final market impact will depend on approval, exchange rates and pass-through by businesses. | |||
Impact on Trade, Industry and Consumers
The biggest immediate beneficiaries are expected to be import-dependent manufacturers, exporters, small businesses and companies that need machinery or inputs to expand production. Sectors using imported raw materials may get relief if lower tariffs are passed through the supply chain.
The policy can also make Pakistan more attractive for investors who need stable and predictable import costs before setting up factories. A simpler tariff system can reduce uncertainty and make business planning easier. This matters for industries that compare Pakistan with regional markets before making investment decisions.
However, the reform will need careful implementation. Domestic industries that depend on high protection may face stronger import competition. The government will also need to manage revenue loss at a time when fiscal space remains tight. For this reason, the policy is expected to move step by step, with annual targets and approval processes guiding the rollout.
If approved and implemented properly, the tariff cuts could help lower business costs, support exports and reduce long-standing distortions in Pakistan’s import system. The final benefit for ordinary buyers will depend on whether lower duties are actually reflected in market prices.
| Business Impact: Importers and manufacturers should track annual tariff schedules carefully because the reform is phased, not immediate. |
Disclaimer: This article is based on available policy details and public reporting. Final tariff treatment may change through official notifications, annual budgets and FBR implementation rules.
