Between Pakistan and Afghanistan, a Trade War With No End in Sight

After deadly cross-border military clashes, the Pakistani and Afghan governments have locked their populations in a trade war threatening the livelihoods of millions.Peshawar’s Afghan market last month.Credit...By Asim HafeezBetween Pakistan and Afghanistan, a Trade War With No End in SightAfter deadly cross-border military clashes, the Pakistani and Afghan governments have locked their populations in a trade war threatening the livelihoods of millions.Peshawar’s Afghan market last month.Credit...By Asim HafeezSKIP Elian Peltier and Zia ur-RehmanReporting from Peshawar, in western Pakistan, and near the busiest border crossing with AfghanistanDec. 9, 2025One of Peshawar’s largest markets in western Pakistan once bustled with thousands of Afghan-owned shops and carts, selling everything from deep-fried khajoor pastries to kitchen items and cricket gear.But business has been cut by half, according to business owners, and the market’s alleys have become so sparse that shoppers can walk freely along its stalls without elbowing through crowds. And aid shipments urgently needed in Afghanistan are piling up at Pakistani ports.“Afghans are afraid of going outside,” said Hameed Ullah Ayaz, an Afghan owner of 12 bakeries in Peshawar.Amid the deepest erosion of relations between Afghanistan and Pakistan in decades, the Pakistani government has cut off cross-border trade. It is aiming to punish the Taliban administration for failing to rein in affiliated militants who attack Pakistan and find refuge on the other side of the border.The suspension of trade is hurting millions of farmers, traders and members of close-knit communities in Afghanistan and Pakistan as trucks full of coal, cement, pomegranates, cotton, medicines and other goods worth $2 billion in bilateral trade last year have not crossed in nearly two months.Afghanistan has scrambled to shift trade routes. Yet Pakistan, with its market of 250 million consumers and the land access it offers to India, has been vital to a beleaguered Afghan economy, which has already been hit this year by aid cuts worth hundreds of millions of dollars, two deadly earthquakes and the forced return of more than 2.5 million Afghans from neighboring countries.ImagePeople selling food in front of Lala Jee Sweets & Bakers, a famous bakery in Peshawar’s Board Bazar, last month.Credit...Asim Hafeez for The New York TimesImagePeshawar’s Afghan market last month. The market’s alleys have become so sparse of customers that shoppers can walk freely along its stalls without elbowing through crowds.Credit...Asim Hafeez for The New York TimesNear Peshawar and along the nearby road that runs through the border, hundreds of container-laden trucks and trailers have sat idle since Oct. 11. Some have been pushed off the road onto the dusty ground. Border guards have barred most crossings, except for Afghan nationals leaving Pakistan.“When they stopped us here, it was still summer,” Abdul Wakeel, an Afghan driver, said on a recent afternoon as he sipped tea on a threadbare carpet at the Torkham border crossing between Pakistan and Afghanistan. “Now winter is right upon us.”Pakistan accuses the Taliban government in Afghanistan of supporting a resurgent insurgency that has killed hundreds of Pakistani security forces in recent years and that struck its capital last month. The Taliban administration has denied supporting Tehreek-e-Taliban Pakistan, also known as Pakistani Taliban or T.T.P., and claims that the violence faced by Pakistan is its own problem.Pakistan has responded by expelling more than a million Afghans this year and carrying out airstrikes on Afghanistan’s capital, Kabul, and in Kandahar, where the Taliban’s leader lives. Dozens of soldiers from both armies were killed in cross-border clashes this fall.A cease-fire declared in October hangs by a thread. Mediation efforts by Turkey, Qatar and Saudi Arabia have yielded no result. And the trade war seems to have no end in sight as both governments have geared up for more hostilities.Pakistan and Afghanistan have repeatedly closed their border since the Taliban reclaimed power in 2021. But Shahid Hussain, a Pakistani representative of traders with more than two decades of experience with Afghanistan, said he had never witnessed such prolonged volatility.ImageShahid Hussain, senior vice president of the Sarhad Chamber of Commerce & Industries, at his office in Peshawar last month.Credit...Asim Hafeez for The New York TimesImageHameed Ullah Ayaz, an Afghan businessman and owner of a bakery at his factory in Peshawar last month.Credit...Asim Hafeez for The New York Times“The Taliban are indicating that things aren’t going to get better anytime soon with Pakistan, and the Pakistani military won’t let up on this,” said Azeema Cheema, the founding director of Verso Consulting, an Islamabad-based research firm. “There doesn’t seem to be any path.”Trade representatives and economic analysts say both sides are shooting themselves in the foot with a trade war.Until this fall, Afghanistan used to rely on Pakistan for more than 40 percent of its exports. Pakistan-imported cement fueled a construction boom in Kabul and other cities, while medicine coming from its larger neighbor filled its pharmacy shelves.More than half of Afghanistan’s 42 million people are in need of humanitarian assistance, yet containers full of aid have been blocked at the border or in Pakistan’s largest port.Pakistan is facing a rising poverty rate of 25 percent, its highest in nearly a decade.“The two are hypocrites,” said Syed Naqeeb Badshah, the president of a lobbying group representing Afghan traders in Pakistan.Nowhere has the effect of the trade suspension been felt harder than in border areas and places like Peshawar, which was a major hub on the old Silk Road and is now a bustling city of two million people with a sizable Afghan population, about 30 miles from Afghanistan.Afghan shop and cart owners running most of the 7,000 businesses in the Afghan Board Market have reported considerable losses, Mr. Badshah said. Affluent Afghan traders have been withdrawing funds from Pakistani banks out of fear of Pakistan’s expulsion drive. Pakistani business partners have grown wary of doing business with them as they also fear that Afghans might be forced to leave.“We’re caught in between the politics of two countries,” Mr. Badshah said from his office overlooking the market.ImageDeported Afghan refugees wait beside halted passenger trucks near the Torkham border crossing in Pakistan last month.Credit...Asim Hafeez for The New York TimesImageTrucks loaded with goods stranded along the road leading to the Torkham crossing in Khyber Pakhtunkhwa Province.Credit...Asim Hafeez for The New York TimesTruck drivers have been stranded for weeks at the Torkham border crossing near Peshawar. They sleep lightly as they listen for footsteps in the dark, fearing that roaming thieves might steal batteries from unattended trucks.On the other side of the border, Afghan farmers have lost their main business destination. In the southeastern province of Kandahar, they were about to export months of harvest, including Afghanistan’s famed pomegranates.Abdullah Khan, a farmer, said that he was sending his fruits at a discounted price to Afghan cities instead, and that he did not know how he would pay back the $15,000 he borrowed to rent three orchards this year.“We are neighbors, we understand each other’s languages and almost have the same culture,” Mr. Khan said. “But we suffer losses every time there is tension between the governments.”The Taliban administration has been seeking new business routes: India announced last month that it would launch air cargo services with Afghanistan “very soon,” and Afghanistan’s and Iran’s chamber of commerces signed a trade agreement last month to boost bilateral exchanges.The World Bank said in a recent report that Afghan exports had increased by 13 percent from September to October as Afghan traders had managed to redirect shipments through Iran and Central Asia.ImageAfghan returnees at the border crossing in Spin Boldak, Afghanistan, earlier this month.Credit...Tomas Munita for The New York TimesImagePomegranates for sale at the border town of Spin Boldak, Afghanistan. In the southeastern province of Kandahar, farmers and sellers were exporting months of harvest, including Afghanistan’s famed pomegranates.Credit...Tomas Munita for The New York TimesTaliban officials have instructed Afghan traders to stop doing business with Pakistan within three months. Mr. Badshah, the president of the trade group, called the order unrealistic.Mr. Ayaz, the Afghan businessman, who employs more than 100 Pakistani workers in his 12 bakeries in Peshawar, said a diplomat from the Afghan Consulate had urged him to move to Afghanistan during a recent impromptu visit to his factory. He would receive free land and housing in Afghanistan, the consulate employee told him.“The guys wouldn’t be able to pay for half of it,” Mr. Ayaz, 41, said about the Taliban administration and the assets he had accumulated in 20 years of business in Pakistan.Like many Afghans, Mr. Ayaz, who was born in Pakistan and has spent his life there, faces deportation as the Pakistani authorities have stopped renewing visas and urged all Afghans to move out.“If I’m deported, I will go back with dignity,” Mr. Ayaz said as two of his sons and his Pakistani associate listened to him in silence.But as he walked through the high-ceilinged rooms of his factory where Pakistani employees prepared soft sandwich bread and creamy cakes on a recent evening, he said, “I don’t know what will happen to them.”ImageA man selling pomegranates in Kandahar, Afghanistan, earlier this month.Credit...Tomas Munita for The New York TimesWasim Sajjad contributed reporting from Peshawar, and Taimoor Shah from Kandahar, Afghanistan.Elian Peltier is an international correspondent for The Times, covering Afghanistan and Pakistan.SKIP