Up to 31%! Pakistan Suddenly Wields Tariff Stick

October 10, Pakistan officially approved the increase of additional import tariffs on tires and motorcycle parts, with the highest tier rising to 31%—but Chinese products are basically not affected.

Policy Highlights: Only Additional Tax Added, Ordinary Tariffs Unchanged

On October 10, 2026, Pakistan's Economic Coordination Committee (ECC), based on tax department proposals, revised Statutory Regulatory Order SRO 693(I)/2006, increasing the additional import tariffs (ACD) for related products, while ordinary tariffs and other taxes and fees remain unchanged. Core adjustments are:

Motorcycle Parts: Additional tariffs on parts purchased overseas by vehicle manufacturers increased from 11% to 31%;

Radial Tires: Additional tariffs increased from 4% to 11%.

The 31% high tax rate targets approximately 13 categories of parts imported by local OEMs as knock-down kits (CKD), for which Pakistan has production capabilities—license plates, brackets, foot pedals, wheel assemblies, windshields, seats, toolboxes, and other body decoration accessories, excluding core parts such as engines and transmissions.

Why the Stick: Localization Anxiety in the Motorcycle Kingdom

About 78% of registered vehicles in Pakistan are motorcycles, with a stock of over 50 million units, an annual after-sales parts market of about $3.75 billion, but about 80% of parts rely on imports. The policy logic is straightforward: increase the import cost of products that can be made locally, making way for local manufacturing.

Chinese Products Exempted under FTA

According to the China-Pakistan Free Trade Agreement (CPFTA), the aforementioned parts imported from China still enjoy zero tariffs or preferential tax rates, and the new additional tariffs usually do not apply. Japan, Southeast Asia, and other major source countries of motorcycle parts are more heavily impacted.

Data supports the significance of Chinese products: Under the China-Pakistan FTA, 75% of Chinese auto-motorcycle parts are duty-free to Pakistan; China accounts for 80%—88% of Pakistan's motorcycle/bicycle tire imports, and auto-motorcycle accessories account for over 70% of its total imports; in 2025, Pakistan imported about $20.5 billion from China, accounting for about 31% of total imports.

But exemptions are not automatically granted: Must simultaneously comply with FTA rules of origin, provide compliant certificates of origin, and HS codes must be on the preference list; any non-compliance may result in collection at ordinary tax rates. Verifying documents for each shipment before delivery is the most valuable action in this round of tariff hikes.

Policy Effectiveness Questioned, Companies Must Keep Backup Plans

An inescapable question: If compliant products from the largest source country China still enjoy zero tax rates, the actual effect of 31% tariffs in suppressing imports may be greatly reduced, and further adjustments may not be ruled out later.

From a short-term perspective, competitor costs rise, and the price competitiveness of Chinese products strengthens relatively; from a long-term perspective, the category of "local production means tariff increase" is expected to expand, and pure trade export space will be compressed. It is recommended that enterprises recalculate quote costs, use the window period to negotiate transition plans with customers, and assess localization plans in advance, while also paying attention to alternative markets such as Bangladesh, Indonesia, and Nigeria.

The tariff stick has already been swung, and the exemption window will not remain open forever—having Plan B ready for Chinese products is more important than enjoying zero tariffs.