From tariffs to tokens

With America’s obsession to gain revenue by restricting trade through customs and tariffs, a historical similarity presents itself: mercantilism. The core similarity between today’s trade framework and then is the focus more on political gains and revenue gained through restriction of goods than cooperative trade. As Carroll Quigley noted, mercantilism was rendered obsolete by the Industrial Revolution and the advent of the steam engine, with James Watt’s patent in 1769 setting in motion pressures that eventually led to the repeal of the Corn Laws in 1846. Here, an important observation is pertinent: the economic theory of Ibn Khaldun in the Muqaddimah (c. 1377). Khaldun noted that dynasties last roughly a century through three generations before disruptions overturn restrictive systems. Having predicted this nearly 800 years ago, it aligns with the fate of mercantilism’s disruption between 1769 and 1846.

Today, as we quickly advance into the AI age, with crypto challenging the global financial system, we find ourselves in a situation where history is repeating itself, albeit faster this time. With AI and crypto revolutions rhyming with the industrial and financial revolutions of the 19th century, the question remains not if but when tariffs and the current trade order become obsolete.

With giant leaps in technology each day, is the world keeping up with the legal frameworks required to sustain the current financial and trade order? Jurisdictional lines in international trading are quickly blurred if an AI bot set up in the Cayman Islands performs borderless work for an American company, with payment going to a Pakistani entrepreneur, without any physical movement of goods.

Just a few days ago, Japan’s NTT Data partnered with Google to build task-specific AI agents across 50 countries, specifically trained to perform sales and marketing operations. With the global AI agents market set to grow 10 times by 2030 (approximately USD 52.6 billion) as reported by MarketsandMarkets, we might be seeing the recreation of the digital services industry. These agents, for now, would not be bound by borders or customs authorities.

Meanwhile, we have Trump’s contradictory stance on tariffs which present a geopolitical game of chess rather than economic statecraft. India, having sharply increased purchases of Russian oil since 2022, faces 50 percent tariffs as punishment while China, purchasing far more, negotiates frequent 90-day extensions at around 30 percent. Pakistan’s effective US tariff exposure remains lower than India’s and, in many lines, China’s, particularly in textiles, accidentally favored in a system where democratic alliance means nothing and punishment seems arbitrary; this chaos itself becomes our opportunity.

That opening is widened by concrete global statistics. Commercial stablecoin flows have grown by an order of magnitude in two years and now run to multi-billion dollars monthly. PayPal launched “Pay with Crypto” on July 28, pushing crypto payments toward the mainstream; Hong Kong’s stablecoin regulations took effect on August 1. Digital services account for about 54 percent of services trade, expanding far faster than physical goods. It is worth noting that these services do not pass a customs desk, often moving as code, models, or tokens. Pakistan also has shown strong potential, by ranking 9th globally in Chainalysis’ 2024 Global Crypto Adoption Index, and 4th in centralized service value received.

As far as adoption is concerned, China seems to be leading this new “financial” and “technological” revolution. Its central bank digital currency (CBDC) has reached hundreds of millions of wallets with cumulative transactions around seven trillion yuan, with cross-border pilots through the BIS Project mBridge alongside Hong Kong, Thailand and the UAE; bilateral currency swaps exceed four trillion yuan with more than 40 countries. Moreover, the renminbi’s share of China’s cross-border transactions has risen from about 20 percent to roughly half in recent years. On the technological front, Chinese labs have pushed competitive AI models to a fraction of Western costs while registering 238 AI services in 2024.

India’s pattern is slightly different. AI adoption among professionals is very high; surveys place India at or near the top globally, and IT firms report strong productivity gains from AI assistants. While bureaucratic and regulatory hurdles have slowed the adoption of virtual assets, India’s ability to match China’s scale in this AI and crypto era remains uncertain. With steep new tariffs penalising Indian exports, its pharmaceutical and electronics sectors are reassessing manufacturing locations; India therefore has more to lose. For Pakistan, the price signal tilts our way; we can move quickly to fill the resulting trade vacuums.

For Pakistan, it appears as if this is an era of opportunities. Our textile exports surged 33.7 percent to USD 1.69 billion in July 2025

, coinciding with crypto framework development. Exporters report pilot settlement experiments via Dubai platforms, subject to disclosure and taxation; IT and IT-enabled services receipts have grown in months when physical exports have stalled. With reports of Chang peng Zhao advising Pakistan’s Crypto Council since April, we rank among the global top ten in crypto adoption with an estimated 15–20 million users and about USD 38 billion in annual remittances.

Policy infrastructure is moving in parallel. The State Bank’s partnership with Japan’s Soramitsu to develop a central bank digital currency, alongside the Virtual Assets Act establishing the Pakistan Virtual Asset Regulatory Authority (PVARA), signals institutional commitment beyond pilot projects. This is reinforced by the government’s aggressive Raast expansion to the district level and integration of digital ID infrastructure, creating domestic payment rails that can connect seamlessly with global stablecoin networks. Finance Minister Muhammad Aurangzeb underscored this trajectory last week, stressing that with 20 to 25 million Pakistanis already active in blockchain and digital assets, the country must build a regulatory framework that drives inclusion, transparency, and efficiency while mitigating risks tied to KYC, AML, and sanctions compliance.

These institutional moves are designed to position Pakistan as both a recipient and provider of borderless digital services. Aurangzeb also highlighted Dubai, Singapore, and the EU as regulatory templates, underscoring Pakistan’s intent to align with global best practices while tailoring its own competitive role in the tokenized economy. With this foundation in place, Pakistan can plug its exporters, freelancers, and digital service providers into the same networks that are increasingly driving global trade.

With both the AI and crypto age in their early stages, there are still cautions. Physical goods still dominate 73 percent of global trade volumes, and manufacturers still report trade uncertainty as a top business risk. Governments can and do regulate digital flows through data localisation, platform access rules and digital services taxes. Major multinationals are investing tens of billions in AI infrastructure; Microsoft and Amazon alone have announced very large 2025 capex plans. This dwarfs America’s USD 100 billion in tariff revenue; capital flows toward the future, not the past.

So, what should Pakistani business do now? Pakistan should anticipate this transition ahead of the curve. Our IT exports have shown promising results, which can be expanded if early adoption succeeds. AI adoption can create wonders for Pakistani businesses. Voice agents can automate call centres, offering foreign clients 24-hour support at minimal cost, much like Japan’s NTT is doing for sales and marketing. Complementary tools such as 3D printing can further boost our textile exports, offering design exports through the help of AI. Together, this approach can turn Pakistan’s IT boom into a sustained export advantage.

For Pakistan, the window is open; move while competitors adjust to higher landed costs. Steam power took seventy-seven years to end mercantilism; digital technologies move faster. India faces headline brackets that raise landed costs; China negotiates extensions again and again; Bangladesh no longer enjoys a free pass. With PVARA underway and the CBDC infrastructure in motion, Pakistan now has the foundations to align its exporters and service providers with the same networks driving global digital trade. Pakistan sits at nineteen percent with a young, English-speaking workforce that can deliver AI-enabled services at scale; we can defend a shrinking space in the old order, or we can help build the new one and sell into it.

The price signal is on our side; speed, reliability and trust will decide who captures it.