After closing its border with Taliban-ruled Afghanistan, Pakistan is now facing a big economic setback. The move was meant to put pressure on Kabul over attacks by the Tehreek-e-Taliban Pakistan (TTP), but it is now costing Islamabad dear. Afghan traders have already started shifting their business to Iran and India, and experts say Pakistan could end up losing over a billion dollars every year because of this standoff.
A warning that backfired
The trouble began after Pakistan’s DG ISPR, Lieutenant General Ahmed Sharif Chaudhry, warned Afghanistan that “blood and business cannot go together.” He said this soon after the TTP carried out repeated attacks from inside Afghanistan. In response, Pakistan closed all border crossings on 11th October and even launched airstrikes on what it said were TTP hideouts across the border.
But this tough stand has now boomeranged. Last week, Pakistan’s Foreign Office confirmed that all trade with Afghanistan has been suspended because the Taliban government is supporting the TTP. Instead of giving in, Afghanistan has begun finding new trade partners and new routes, leaving Pakistan’s traders stuck and suffering.
Afghan traders turn to Iran and India
In November, Afghanistan’s deputy prime minister, Mullah Abdul Ghani Baradar, told Afghan traders and industries to stop depending on Pakistan. He instructed them to wrap up their existing trade contracts with Pakistani companies within three months and start looking toward other countries.
This shift has already hit Pakistan’s exports hard. According to the State Bank of Pakistan, exports to Afghanistan dropped by 57% in October alone. In 2024, Pakistan had exported goods worth $800 million to Afghanistan. Another $270 million worth of goods went to Central Asian countries through Afghan transit routes. With the border closed, Pakistan risks losing more than a billion dollars in annual earnings.
Traders face huge losses as cargo piles up
On the ground, the effect has been instantaneous. According to the Pakistan Pharmaceutical Manufacturers Association, or PPMA, dozens of containers carrying medicines worth billions of rupees are stuck at the border. These medicines are now at risk of going to waste as they wait for clearance.
The Pak-Afghan Joint Chamber of Commerce and Industry has also sounded the alarm. Senior Vice President Zia ul Haq Sarhadi called upon the government to at least open the border for a few days so that the stranded cargo could move. He said there is no point in letting valuable goods rot on both sides, especially when so many people depend on cross-border trade.
Pakistan’s worst-hit products
According to the Dawn report, following the prolonged border shutdown, the cement industry in Pakistan is among the worst hit. With Afghan coal imports and cement exports coming to a complete halt, Pakistani manufacturers are forced to switch to far costlier coal from South Africa, Indonesia, and Mozambique.
The price of local coal has shot up from PKR 30,000–32,000 to PKR 42,000–45,000 per tonne, while Afghan coal that was once available for PKR 30,000–38,00 has vanished from the market.
Perishable fruits and vegetables, too, which once accounted for the country’s most important export items to Afghanistan, have been severely hit. The trade freeze has brought most export flows to a halt. Shipments are stuck or even destroyed. As a result, prices of imported fruits have doubled in Pakistan, forcing consumers to pay much more, while many exporters have written off entire consignments.
On the revenue side, the impact is no less grim. With export volumes plummeting, tax collection from transit duties and customs has dropped sharply, depriving Pakistan of valuable foreign reserves when the economy can least afford it.
Afghanistan also hit, but quickly found alternatives
Afghanistan, too, has been affected. Almost 41% of its exports, mainly food items and coal, go to Pakistan. It also imports about 14% of its direct goods from Pakistan. But instead of waiting for Pakistan to reopen the border, Kabul has switched gears.
The Taliban government is now increasing its use of the Indian-operated Chabahar port in Iran. It is also exploring more trade partnerships with India and Central Asian countries. In late November, Afghanistan’s minister of industry and commerce, Al-Haj Nooruddin Azizi, visited India for five days. During this trip, both countries agreed to station an Afghan commercial attaché in India, offer tax breaks to Indian investors in Afghan gold mining, and start an air cargo corridor to boost trade.
The United States has also given India a six-month sanctions waiver to keep the Chabahar port running, which makes it even easier for Afghanistan to reduce its reliance on Pakistan.
