by Soheil Zali, Regional CEO Middle East & South Asia and Florian Walther, Pakistan Representative at the German Emirati Joint Council for Industry and Commerce (AHK UAE)
Recent adjustments to U.S. tariff policy—currently in a brief grace period before taking full effect and still subject to change through ongoing negotiations—have sparked renewed discussion about the resilience of global supply chains and the shape of future trade alliances. For Pakistan—where the United States absorbs roughly 17 percent of all exports, worth about US $5.5 billion in 2024—the changes present both risk and room to grow.
Because competing Asian suppliers face steeper duty exposure, Pakistan is well-positioned to expand its share in price-sensitive U.S. segments while simultaneously diversifying toward Europe. Germany, already Pakistan’s largest export destination inside the EU at about US $2.4 billion in 2024, offers a natural channel for that diversification, underpinned by the EU’s GSP+ preferences and decades of economic cooperation.
Against this backdrop, Germany and Pakistan have an opportunity to deepen bilateral trade ties on a foundation of mutual, sustainable growth—aligning Pakistan’s competitive textile base with Germany’s demand for reliable, responsibly sourced materials and progressive suppliers.
Germany–Pakistan Trade: Strong Foundations, Untapped Potential
Germany has long been Pakistan’s principal trading partner inside the European Union. In 2024, Pakistani goods worth roughly US $2.4 billion entered the German market—about 22 percent more than in 2020—with textiles and apparel accounting for nearly three-quarters of the flow. The figures point to reliability and scale, yet also highlight headroom for growth as both countries reassess supply-chain strategies.
“Textiles have traditionally anchored our bilateral trade, making up about three-quarters of Pakistan’s exports to Germany,” notes Florian Walther, Pakistan Representative at AHK UAE. “On the return leg, German machinery powers every stage of Pakistan’s value chain. That interdependence is a sturdy backbone, but it still leaves considerable untapped potential.”
Why these trade links matter now
- Transparent supply chains: Recent U.S. tariff shifts and the EU’s more demanding due-diligence regime are prompting German buyers to seek partners that can document product origin, labour standards, and carbon footprint. Pakistan’s GSP+ duty-free access (extended to 2027), together with expanding traceability audits and renewable-energy retrofits, positions the country well.
- Available production headroom: The textile sector’s installed capacity—about 13 million spindles and 199 000 rotors—was running at just 72 percent utilisation in FY 2024, leaving meaningful slack that can be mobilised quickly for new orders.
- Complementary market dynamics: Germany is the EU’s largest importer of apparel, while the US market – still taking 17 percent of Pakistan’s exports – is exposed to tariff volatility. Shifting part of that output toward Europe can diversify Pakistan’s revenue base and give German brands a resilient, price-competitive sourcing option.
“Pakistan and Germany have enjoyed almost 75 years of cross-border collaboration. With shifting trade dynamics, these countries have renewed potential to further strengthen bilateral ties and leverage mutually beneficial opportunities, in textiles and beyond,” Soheil Zali, Regional CEO – Middle East and South Asia at Tradewind, said.
Pakistan’s textile sector: ready to scale for Europe—anchored by German demand
Pakistan’s textile and apparel industry—supported by a young workforce and decades of know-how—supplies almost three-quarters of the country’s textile exports to the European Union. Within that bloc, Germany alone absorbed roughly US $1.8 billion in 2024, making it the anchor market for future growth. Its installed spinning and processing capacity gives European buyers both volume and lead-time flexibility, while the sector’s ongoing investments in traceability, wastewater treatment and renewable energy align with the EU’s heightened due-diligence expectations.
Beyond staple cotton products, Pakistani mills are moving into technical and performance fabrics, recycled blends and low-impact dyeing techniques. These niches offer attractive scope for bilateral R&D partnerships and for German machinery and chemical suppliers already active along the value chain.
“Reliable financing instruments are a practical bridge between Pakistan’s available production headroom and Germany’s demand for diversified, transparent sourcing,” observes Soheil Zali, Regional CEO – Middle East & South Asia, Tradewind Finance. “They allow exporters to scale sustainably without sacrificing liquidity.”
Building a future-ready trade framework
“In our latest AHK World Business Outlook, firms trading between Pakistan and Germany identified trade barriers as one of their key concerns both in the year ahead and over the next five years,” says Florian Walther, Pakistan Representative at AHK UAE.
A stable policy environment would give German importers the confidence to deepen sourcing relationships and encourage manufacturers to expand technology transfers and joint ventures in Pakistan. Just as important is the ongoing alignment with EU and German sustainability frameworks—from the forthcoming Corporate Sustainability Due Diligence Directive to Germany’s Supply-Chain Due Diligence Act. Continuous cooperation on these standards—covering traceability, labour safeguards, and carbon reporting—can sharpen Pakistan’s competitive edge by demonstrating transparent, future-proof supply chains.
Real progress, however, hinges on robust public-private partnership. Business chambers such as AHK UAE, together with government agencies and sector associations on both sides, provide the neutral platform where policy clarity meets practical implementation. By convening dialogue, piloting compliant production methods, and sharing best practices, these partnerships will turn today’s shifting trade landscape into stronger, more resilient Germany-Pakistan economic ties.
Conclusion
The current wave of US tariff adjustments is more than a supply-chain disruption; it is a catalyst for Pakistan and Germany to unlock still-untapped potential in their bilateral economic relationship. With ample spare capacity and improving compliance capabilities, Pakistan can step up as a dependable, competitively priced source for German apparel and home-textile brands. Should this expansion succeed, it will also lay the groundwork for gradual collaboration in adjacent fields—technical textiles, green machinery, even renewable-energy components—broadening gains for both economies over time. By seizing this opportunity, Germany and Pakistan can transform a tariff-driven shift into broader, mutually reinforcing growth.
About AHK UAE
The German Emirati Joint Council for Industry & Commerce (AHK UAE) is part of the worldwide network of German Chambers of Commerce Abroad (Deutsche Auslandshandelskammern), supported by Germany’s Federal Ministry for Economic Affairs and Energy. From its hubs in Dubai and Abu Dhabi, AHK UAE represents and supports German companies active in the UAE, Oman, Qatar, Kuwait, Pakistan and closely cooperates with the AHK offices in Iraq (Erbil and Bagdhad).
About Tradewind Finance
Tradewind Finance is a global trade-finance specialist with more than 25 years of experience in non-recourse export factoring, supply-chain finance and trade-credit insurance. Operating from 15 offices across the Americas, Europe, the Middle East and Asia—including presences in Germany, the UAE and Pakistan—the company combines German structuring expertise with local market knowledge to give exporters reliable working-capital solutions, risk mitigation and the flexibility to grow in dynamic international markets.
