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The air along the Pakistan-Afghanistan border isn’t just thick with geopolitical tension; it’s heavy with economic uncertainty. For nearly two and a half months, the bilateral trade between Islamabad and Kabul has been suspended, and contrary to what many might assume, the economic fallout is anything but symmetrical. Data reveals a stark reality: Afghanistan is bearing a significantly heavier burden, with export losses far outpacing Pakistan’s, underscoring the profound and unequal toll of this prolonged disruption.
The Roots of the Rupture: More Than Just Trade
The current trade freeze isn’t an isolated event. It stems from a deepening rift in Pakistan–Afghanistan relations, primarily fueled by Islamabad’s concerns over the banned Tehreek-i-Taliban Pakistan (TTP) and its cross-border activities. Border clashes on October 11, 2025, sparked a series of ultimately fruitless negotiations, even with mediation from Turkiye and Qatar. When talks officially broke down on November 7, citing “big differences,” Afghanistan suspended trade ties, following Pakistan’s earlier border closure.
Afghanistan’s Deep Dive into Economic Distress
The numbers paint a grim picture for Kabul. Since October 10, Afghanistan’s export losses have soared to approximately 10%, dwarfing Pakistan’s comparatively modest 0.6%. This disparity highlights Afghanistan’s critical dependence on its neighbor. Nearly 46% of Afghanistan’s total exports are destined for Pakistan, a figure that includes a substantial volume routed onward to India via the Wagah border. In stark contrast, Afghanistan accounts for only about 3.46% of Pakistan’s global exports. And this doesn’t even factor in transit trade, which represents around 40% of Afghanistan’s total imports, further exacerbating Kabul’s predicament.
India, despite not sharing a border, has emerged as Afghanistan’s second-largest export destination, absorbing around 40% of its total exports. This underscores the pivotal role of transit through Pakistan, particularly the Wagah border, for Afghan goods reaching the Indian market. Meanwhile, exports to Afghanistan’s other bordering neighbors remain marginal.
A Dire Dilemma for Afghan Exports
Perhaps the most vulnerable sector for Afghanistan is its agricultural produce. Fruits and vegetables constituted a staggering 71% of total exports in 2024. While Kabul might reroute some imports to Central Asian states, Iran, and India, finding alternative markets for such a large volume of perishable goods is a monumental challenge. This raises a critical question: why are the Taliban seemingly willing to disrupt supply chains that promise significant damage to an already struggling Afghan economy?
Khan Jan Alokozai, President of the Afghanistan–Pakistan Joint Chamber of Commerce (APJCC), confirms the grim reality. “Afghan importers have already begun shifting orders away from Pakistan… particularly in key sectors such as cement and pharmaceuticals.” He notes that Iranian cement is now proving cheaper, and medicines are being sourced from Turkey, Uzbekistan, Iran, and even India via air cargo. While Pakistani pharmaceuticals still hold 60-70% of the Afghan market, that share is under serious threat. Alokozai acknowledges losses on both sides but expects prices in Afghanistan to stabilize as alternative arrangements slowly emerge.
Pakistan’s Economic Ripples: Smaller, But Not Insignificant
While the percentage loss for Pakistan is far lower, the disruption still carries a hefty price tag. Pakistan’s average export losses are estimated at $222.5 million. Sectors dealing in top export items like medicines, rice, and cement, along with allied construction industries that benefited from Afghanistan’s recent building boom, are feeling the pinch. Muhammad Ishaq, former president of the Sarhad Chamber of Commerce and Industry (SCCI), emphasizes that the “formal sector has emerged as the principal victim,” particularly industries in Punjab and Khyber Pakhtunkhwa (KP), where over 90% of Pakistan’s exports to Afghanistan are routed through the Torkham border.
Islamabad also faces a challenge: how to manage the loss of a market that, prior to the suspension, was exceeding $1 billion annually. While Afghanistan’s share in Pakistan’s overall exports is relatively small, consistent supply chain disruptions can have lasting consequences, making it difficult to regain market access once lost.
The Broader Impact: Transit Trade and Long-Term Shifts
The disruption extends beyond bilateral trade to the crucial realm of transit trade. Afghanistan’s total import bill stood at $10.8 billion in 2024, with Pakistan facilitating a significant portion. However, due to shifting policies and “smuggling-prone” item restrictions, the value of Afghan imports transiting through Pakistan has dramatically declined from $6.701 billion in FY23 to a projected figure below $1 billion in FY26. Afghan traders are increasingly diverting imports to Iran, Uzbekistan, Tajikistan, Turkmenistan, India, China, and the UAE, seeking more stable routes.
Conversely, Pakistan’s nascent efforts to leverage Afghanistan as a transit corridor to Central Asian States (CAS) are also being stalled. Containers carrying goods for Pakistan are stranded on the Afghan side, and Pakistani transit cargo is piling up within Afghanistan. Ishaq notes that even planned industrial relocation from Punjab’s textile industry to Uzbekistan has been halted, and vital cotton and coal imports from CAS for Pakistani industries are affected. While Iran offers an alternative, the significantly longer route sharply increases transportation costs, eroding competitiveness.
As social media buzzes with hostile rhetoric across the border, the quiet but profound economic fallout is often overlooked. Prolonged border closures risk widespread job losses on both sides, and severe setbacks to Afghanistan’s agricultural trade are set to deepen poverty in a nation where livelihoods are intrinsically tied to cross-border commerce.
A Recurring Pattern, With New Stakes
This isn’t the first time economic ties between Pakistan and Afghanistan have been strained; bilateral trade was suspended three times between 1949 and 1963. However, the current situation highlights a renewed vulnerability for Afghanistan and a critical moment for Pakistan to re-evaluate its regional trade strategies. The long-term implications of these diversions and lost market access could reshape regional commerce for years to come, making a swift, workable resolution more critical than ever.
Source: Original Article
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