The Pakistan Stock Exchange (PSX) experienced a record-breaking crash on Monday, with the benchmark KSE-100 index plummeting by a staggering 8,687.69 points to close at 110,103.97. This came on the heels of a dramatic 6,000-point drop earlier in the session, marking the sharpest intraday decline in the PSX's history.
The market freefall was triggered by mounting concerns over U.S. President Donald Trump's newly enforced 2025 tariff policies, which have sparked alarm in developing economies. The most immediate impact on Pakistan was the sudden spike in tariffs on its key exports to the U.S., rising sharply from 4–5% to an unprecedented 29%. Textile, surgical goods, and leather industries — all heavily reliant on U.S. markets — have been hit particularly hard.
Global financial markets have reacted with volatility. In Europe, stock indices saw sharp declines, while Asian markets remained mixed. Emerging economies in South Asia and Africa are reassessing trade strategies in response to what some economists are calling a "tariff supercycle."
International Reaction:
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China, already in a prolonged trade standoff with the U.S., condemned the new tariff round, calling it "economic aggression" and promising retaliatory measures.
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India voiced concern over indirect impacts, especially in its pharmaceuticals and IT sectors.
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The European Union warned that the global trade system is “at risk of fragmentation,” urging for a WTO intervention.
Despite the chaos, some analysts believe that the shifting trade dynamics may present long-term opportunities for countries like Pakistan. Lower global demand for U.S. imports could potentially reduce commodity prices, resulting in cheaper import costs for raw materials and machinery.
However, immediate concerns are focused on capital flight, currency depreciation, and investor confidence. The Pakistani rupee has already begun to slide against the dollar, while foreign portfolio investors are pulling back amid uncertainty.
The PSX crash underscores the fragility of emerging markets in the face of unilateral global trade policies. Policymakers in Islamabad are reportedly in emergency meetings with business leaders to assess damage and formulate a response.
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