Pakistan's Self-Inflicted Trade War with Afghanistan

Pakistan's Self-Inflicted Trade War with Afghanistan

A trade war with dirt-poor Afghanistan might sound absolutely daft – after all, Afghanistan barely has an economy left – but it's bleeding Pakistan dry in ways most people don't realise.

Pakistan and Afghanistan have always traded heavily because they share a long border, and Pakistan is landlocked Afghanistan's main route to the sea. Pakistan buys Afghan coal, cement, fruit, nuts, and talc; Afghanistan buys Pakistani wheat, sugar, cement, and pretty much everything else. Until recently this trade was worth around $2–3 billion a year and was roughly balanced.

Then Islamabad got tough. Between 2023 and 2025, Pakistan started demanding proper bank-to-bank payments instead of the old informal "hundi" system, slapped 10–20% duties on Afghan exports, required Afghan lorry drivers to have passports and visas (almost none did), and sometimes just shut the border for weeks at a time. The official reason was "stop smuggling and terrorism", but many in Kabul saw it as punishment for the Taliban refusing to crack down on TTP militants.

The result has been catastrophic—for Pakistan.

Afghan traders simply turned north. Iran and Central Asia (Uzbekistan, Turkmenistan) built new roads and railways. Afghan coal, which once made up 40% of Pakistan's imports, is now going to India and China through Iran's Chabahar port. Pakistan's own coal mines and cement factories are sitting idle, and thousands of factory workers in Khyber Pakhtunkhwa have been laid off. Fruit exporters in Afghanistan now send their grapes and pomegranates to India and Dubai by air or through Iran instead of using the cheap land route via Karachi. Transit trade—the fees Pakistan earned for letting Afghan goods pass through to the sea—has collapsed from over $1 billion a year to almost nothing.

So Pakistan has lost export markets, lost transit revenue, watched its own industries shut down, and seen prices of coal and cement soar at home—all whilst fighting one of the world's poorest countries. The trade war has cost Pakistan billions and gained absolutely nothing, proving once again that when you pick an economic fight with your only viable neighbour, even a broke one, you can still end up the bigger loser.