The Tariff Bombshell

The hardest thing to predict in global politics is what Donald Trump will do next. So it is entirely possible that by the time you read these sentences, Donald Trump may have reversed a substantial portion of his newly announced tariff policy on global trade with the United States (we think it is more likely that he will keep the policy, but who knows?)

Even if he does walk back some of the more extreme measures on tariff policy, one thing is for certain: the world that America has built over the past 80 years is gone, largely because America has lost the appetite to keep it going.

At the most basic level, this could be a story about the 18% of Pakistan’s exports – about $5 billion a year – that go to the United States, and what is likely to happen to them now that the United States government has imposed a 29% tariff on them. But that would be too simplistic a story.

This is about more than tariffs, after all. It is about a whole institutional architecture that governed the world order as we have known it for almost a century, and that architecture is well and truly gone. Pax Americana is over, and while most readers of this magazine may fancy themselves anti-imperialists who will bid it good riddance, we can assure you that you will like what comes next a lot less.

This is a story of trying to unravel what comes next. But before we do that, we will examine what America built, why they built it, why they no longer want to maintain it, and what comes next for Pakistan.

At the end of this story, we hope you will understand just how dependent the whole world – not just Pakistan – has been on the United States to maintain the basic structure of how the world works. Once the Americans start pulling back, every country in the world will start to see themselves vulnerable to shocks in ways they have no living memory of anymore.

This is a story about a lot more than the tariffs from America. It is about our ability to export at all, our ability to import anything we need, even the ability of Pakistani expats to earn money abroad.