Pakistan bonds slide after new Trump tariffs

LONDON: Pakistan’s international sovereign bonds slid by 0.5% on Friday, and Sri Lanka and Indonesia bonds also came under pressure, after US President Donald Trump announced new tariffs.

The new US tariffs of 10% and 12.5% on goods from 60 trading partners over allegations of lax enforcement of forced labour bans were announced just as a temporary 10% global tariff expires.

Pakistan’s 2036 issuance fell by 0.5% to bid at 97.80 cents, while Indonesia’s 2045 maturity matched those losses to bid at 88.48 cents.

Sri Lanka’s 2033 maturity shed just over 1 cent to bid at 93.05 cents on the dollar. The US is Sri Lanka’s single largest export market, with roughly $3 billion in shipments, mostly in apparel.

Argentina, Bangladesh, Britain, Cambodia, Canada, Ecuador, El Salvador, Guatemala, Honduras, India, Indonesia, Jordan, Malaysia, Mexico, Pakistan, Sri Lanka, Trinidad and Tobago face the new 10% tariff.

The European Union, Taiwan, Japan, South Korea and Switzerland were assigned rates that, combined with pre-existing most-favoured-nation tariff rates, would total 10% or 12.5%.

The new tariff move is the White House’s latest effort to restore President Donald Trump’s campaign vision of a near-global tariff after the US Supreme Court in February struck down his “reciprocal” duties of 10% to 50% imposed last year under a national emergencies law to try to shrink the US trade deficit.

The tariffs, announced on Thursday in a Federal Register notice, cover 99.4% of US imports, but include numerous product exemptions, such as oil and gas, fertiliser and certain food items.