Pakistan Lacks Plan as US Sanctions on Iran Threaten $800 Million Informal Trade

Pakistan's Ministry of Commerce has not devised a specific plan to address the potential consequences of the United States' impending restrictions on Iran, amid concerns that the new sanctions could significantly impact Pakistan's informal trade with the neighboring nation. The country is keeping a close eye on the situation, according to officials, though the execution of the US Treasury's operation dubbed Economic D Day, announced on August 24th, remains pending.

The sanctions are projected to encompass punitive secondary sanctions against nations perpetuating trade with Iran, as reported by Business Recorder.

Pakistan's formal trade exports to Iran are relatively modest, while the informal trade between the two countries is pegged at approximately $800 million yearly, encompassing trade via informal channels and barter arrangements. Rice exports primarily transit through the Gabd Border Crossing Point, while mango shipments typically traverse Taftan.

Official statistics indicate that 1,209 trucks carrying rice traversed the Gabd checkpoint between June and July 2026, while roughly 1,121 trucks transporting mangoes passed through Taftan during the same timeframe.

Security quandaries in Balochistan pose an additional hurdle to bilateral trade, particularly along the Quetta to Taftan corridor. Cargo vehicles journey in convoy with Frontier Corps, yet truck attacks continue to disrupt trade. Islamabad has offered exemptions for certain formal trade transactions, comprising waivers from financial instrument prerequisites for imports from Iran and cargo under the Central Asia Regional Economic Cooperation corridor through Iran.

Exports of indispensable goods such as food, medications, and tents to Iran, as well as rice shipments to Azerbaijan via the Iranian land route, have also garnered temporary exemptions.

The issue surfaces shortly after the 10th assembly of the Pakistan Iran Joint Trade Committee, convened in Islamabad from August 3rd to 5th. Both parties resolved on measures to enhance customs operations, road and rail connectivity, border crossings, and air cargo operations, including 24-hour customs services at border crossing points.

Officials avow that these measures could bolster formal bilateral trade, yet the tightened US sanctions on Iran could complicate trade through the Iran corridor. With formal exports already curtailed and a substantial portion of trade transacted informally, Islamabad is under pressure to appraise the potential ramifications of the fresh measures and devise a contingency strategy.