50% Tariff on Indian Basmati Gives Pakistan Competitive Edge in US Trade

The 50% tariff imposed by the Trump administration on Indian goods, including basmati rice, has significantly reshaped trade flows in the United States, creating a golden opportunity for Pakistan to expand its footprint in the American aromatic rice market. The tariff dispute stems from US punitive measures targeting India’s trade and energy ties with Russia, which led to broad tariffs on several Indian exports, including basmati rice, pharmaceuticals, and electronics. While some sectors later received exemptions, basmati rice remained subject to the full 50% tariff. In contrast, Pakistani basmati rice faces a lower tariff of 19%, giving it a significant pricing advantage in the US market. Indian media reports suggest that the tariff hike could slash India’s basmati exports to the US by 50-80%, with prices soaring to nearly $1,800 per metric tonne. Pakistani basmati, by comparison, remains competitively priced at around $1,450 per metric tonne, making it an attractive option for US importers and retailers. Pakistan’s basmati rice exports have seen remarkable growth in recent years, with the country capitalizing on its competitive pricing and high-quality product. According to the Rice Exporters Association of Pakistan (REAP), Pakistan exported approximately 772,725 tonnes of basmati rice in FY24, generating $876.9 million in revenue. This marks a substantial increase from the 595,120 tonnes worth $650.4 million exported in the previous fiscal year. The average export price per tonne also rose from $1,092.93 to $1,134.86, reflecting growing demand and value. Data from Volza’s Global Trade platform reveals that between November 2023 and October 2024, the United States accounted for 24% of Pakistan’s total basmati rice exports, with 1,519 shipments. Italy and the United Kingdom followed as key markets, contributing 14% (908 shipments) and 11% (716 shipments), respectively. Together, these three markets consumed nearly half (49%) of Pakistan’s basmati rice exports. Pakistan currently exports basmati rice to over 110 countries, with other major destinations including Australia, Saudi Arabia, the UAE, Canada, the Netherlands, and Germany. According to the US Department of Agriculture (USDA), rice imports in the United States have grown steadily over the past three decades, increasing from 7% of the domestic market in 1993/94 to over 25% by 2022/23. More than 60% of these imports consist of aromatic varieties from Asia, primarily jasmine rice from Thailand and basmati rice from India and Pakistan. While the US produces some aromatic rice domestically, these varieties differ in quality and aroma from their Asian counterparts. The USDA projects continued growth in demand for imported aromatic rice, presenting a lucrative opportunity for exporters like Pakistan.