Afghanistan’s Tariff Committee doubles duties on leather and plastic footwear, lifts rates on paint, plaster, bottles and nappies, and signals an import-substitution turn in one of Asia’s most import-dependent economies.
KABUL, September 28, 2026
Afghanistan’s Ministry of Finance has raised import tariffs on seven categories of goods and lowered the rate on one, in a package agreed at the third meeting of the country’s Tariff Committee for the year 1405 and announced on Monday.
The increases are substantial in percentage point terms and steep in proportional terms. The import tariff on plastic footwear rises from 50 to 80 percent. Leather footwear doubles from 20 to 40 percent. Plaster rises from 50 to 80 percent. Building paint nearly doubles from 16 to 30 percent. Bottles rise from 12 to 16 percent, and nappies from 20 to 25 percent. The single reduction applies to what the ministry statement describes as heart springs, cut from 8 percent to 3.5 percent.
The committee was chaired by Finance Minister Mullah Mohammad Nasir Akhund. The ministry said the meeting was attended by representatives of the Ministry of Mines and Petroleum, the Ministry of Commerce and Industry, the Ministry of Agriculture, Irrigation and Livestock, the Ministry of Public Health and the Ministry of Economy, along with the Office of the Deputy Prime Minister for Economic Affairs, the General Directorate of Intelligence, and representatives of the chambers of commerce and investment and the chambers of industries and mines.
According to the statement, the decisions followed comprehensive discussions and were taken with the aim of supporting domestic industries and production and promoting agriculture and trade. The ministry did not say when the new rates take effect.
What the package targets
The selection of goods is not random, and read together the seven lines describe a coherent, if narrow, industrial strategy.
Footwear is the centrepiece. Doubling the leather footwear rate to 40 percent and raising plastic footwear to 80 percent puts Afghan tariffs on these goods among the highest applied rates anywhere for consumer products. Footwear is a classic first-stage manufacturing sector: labour-intensive, requiring modest capital, buildable at small scale, and with local raw material availability in the case of leather given Afghanistan’s substantial livestock sector. It is the sector that import-substitution programmes have targeted first in dozens of developing economies over the past century.
Plaster at 80 percent and building paint at 30 percent target construction inputs. Afghanistan has gypsum deposits and has had domestic plaster production capacity, and paint formulation is another low-barrier manufacturing activity. Both sectors serve a construction market that, whatever the state of the wider economy, continues to consume materials.
Bottles at 16 percent and nappies at 25 percent are lighter increases and read as protective adjustments for existing domestic producers rather than attempts to create new industries.
The reduction on heart springs, evidently a medical or component item, runs the other way. Cutting a rate from 8 to 3.5 percent on a good with no domestic production is the textbook complement to raising rates on goods that do: lower the cost of what cannot be made locally, raise the cost of what can.
The ministry added that the committee also took decisions on harmonising tariffs on wires, iron nails, frozen potatoes and flavouring substances, without specifying the outcome. Tariff harmonisation in this context generally means aligning rates across related tariff lines to remove the anomalies that invite misclassification.
The institutional setting
The Tariff Committee’s composition is worth noting because it explains the shape of the package.
The attendance list spans finance, mines and petroleum, commerce and industry, agriculture, public health and economy, along with the deputy prime minister’s economic office and the intelligence directorate, plus private sector representation from the chambers of commerce and investment and the chambers of industries and mines.
That is a producer-weighted forum. Chambers of industry argue for protection of the goods their members make. Chambers of commerce, which represent traders and importers, argue against. Line ministries advocate for their sectors. The outcome, a package that raises rates on locally producible consumer and construction goods while cutting one on a non-producible item, is what such a forum typically produces.
Notably absent from the described process is any mechanism resembling an injury investigation. These are not trade remedies in the World Trade Organization sense. Afghanistan is not a member of the organization, having pursued accession without concluding it, and it is therefore not bound by the bound-rate ceilings and most favoured nation disciplines that constrain members. The Tariff Committee can set applied rates by administrative decision, at whatever level it chooses, without a dumping or subsidy finding and without an injury test.
That freedom is unusual in the contemporary trading system and is itself the story. Most governments raising a consumer goods tariff from 50 to 80 percent would require a legal instrument, an evidentiary record and a defence against challenge. Afghanistan requires a committee meeting.
The import dependence problem
The context for these decisions is an economy that imports far more than it exports and that has limited means of paying for either.
Afghanistan’s trade deficit has been structural for decades and widened after 2021 as international assistance contracted, banking channels narrowed and the formal economy shrank. Consumer goods, fuel, food staples and construction materials are overwhelmingly imported, principally from Pakistan, Iran, China, Uzbekistan, Turkmenistan and the United Arab Emirates. Export earnings come mainly from dried fruit and nuts, carpets, coal and minerals, and are a fraction of the import bill.
In that setting, tariffs serve two purposes that pull in different directions. They protect whatever domestic production exists, which is the stated rationale. They also raise revenue, and customs duties are one of the more collectable taxes available to a state with limited administrative reach into the domestic economy.
The tension is that a tariff set high enough to eliminate imports collects no revenue. An 80 percent rate on plastic footwear is at or beyond the level where it stops being a revenue instrument and becomes a prohibition, particularly given the porousness of Afghanistan’s borders and the scale of informal cross-border trade with Pakistan and Iran.
That is the practical constraint on the entire package. Afghanistan’s long land borders and the established informal trading networks that run across them mean that applied tariff rates and effective tariff rates are different things. A rate increase that makes formal importation uneconomic tends to shift trade into the informal channel rather than to domestic producers, which yields neither protection nor revenue.
The calendar and the cadence
The announcement noted that this was the third meeting of the Tariff Committee in 1405, the current year in the Solar Hijri calendar used for official purposes in Afghanistan, which began in March 2026.
Three tariff-setting meetings in roughly six months is an active cadence. For comparison, most economies revise applied tariff schedules annually as part of a budget process, with intra-year changes reserved for emergencies or for trade remedy determinations. A committee meeting quarterly and adjusting rates at each sitting produces a tariff schedule that changes several times a year.
For importers, that cadence is the operative risk. A purchase order placed against a known duty rate may clear at a different one. Long-lead-time shipments, which for landlocked Afghanistan means most shipments, are exposed across the interval between order and clearance. Businesses trading into the market should be pricing that variability rather than treating the current schedule as fixed.
It also means that the current package should not be read as a one-off. If the committee continues at this rate, further increases in other consumer and construction categories are likely at the next sitting, and the sectors already named give a reasonable guide to the selection criteria: goods that can plausibly be made domestically, at modest scale, from locally available or easily imported inputs.
Comparison with the region
The rates in this package are high by regional standards, though not without parallel.
Pakistan, Afghanistan’s largest trading partner, maintains a tariff structure with substantial peaks in consumer goods, and its own footwear and finished goods rates have historically sat well above its average applied rate. Iran applies high duties on a range of consumer imports as part of a long-standing import-substitution policy reinforced by foreign exchange constraints. India, Bangladesh and Sri Lanka all maintain elevated duties on footwear and construction materials relative to their overall averages.
What distinguishes the Afghan rates is the level. An 80 percent applied duty on plastic footwear exceeds the peaks in all of those systems. Only a handful of economies globally apply consumer goods duties at that level outside of trade remedy measures, and those that do generally have either severe foreign exchange constraints, a deliberate luxury-goods taxation policy, or both.
Afghanistan’s foreign exchange position is the relevant factor. With export earnings a fraction of the import bill and access to international financial channels constrained, compressing the import bill is a macroeconomic objective independent of any industrial policy goal. High tariffs on non-essential and substitutable consumer imports serve that objective directly, and the industrial policy framing may be as much justification as motivation.
That reading, if correct, has an implication for how long the rates last. Tariffs imposed to build an industry should fall as the industry matures. Tariffs imposed to compress an import bill stay until the balance of payments improves.
Reaction
Reaction has been limited and cautious, which is characteristic of commercial commentary in the country.
Domestic manufacturers in the affected sectors, represented in the committee through the chambers of industries and mines, have been the constituency pushing for these increases and can be expected to welcome them. Afghan footwear, plaster and paint producers have argued consistently that imported goods, particularly from Pakistan and China, undercut them to a degree that prevents domestic capacity from developing.
Traders and importers, represented through the chambers of commerce, bear the cost. For an import-dependent consumer market, tariff increases on footwear, paint and nappies are ultimately borne by households whose purchasing power has contracted sharply since 2021.
Regional partners have not commented publicly. Pakistan, the principal source of many of the affected goods, has its own long-running disputes with Kabul over transit trade and border closures, and the tariff package will register as one more irritant in a relationship that has produced repeated border shutdowns. Iran, another significant supplier, has been expanding commercial engagement with Kabul, with talks on trade and transit cooperation held as recently as September 24 and an offer to supply up to 2,000 megawatts of electricity reported on September 19.
Economic impact analysis
The likely effects can be sketched with reasonable confidence even without detailed trade data.
On prices, the immediate effect is upward for the affected goods in the formal market. A 30 percentage point increase on plastic footwear and a 20 point increase on leather footwear are large enough to move retail prices materially, and footwear is a necessity good with low substitution possibilities at the bottom of the income distribution.
On domestic production, the effect depends entirely on whether latent capacity exists. Where a domestic producer is already operating and merely uncompetitive on price, a large tariff can bring it into the market quickly. Where no capacity exists, a tariff raises prices without creating supply, because building a footwear factory requires capital, machinery imports, power and skilled labour, all of which are scarce. Afghanistan has some capacity in each of the targeted sectors, but the scale relative to national consumption is the open question.
On revenue, the effect is ambiguous for the reasons set out above. Moderate increases on bottles and nappies will probably raise collections. The footwear and plaster increases are more likely to reduce recorded imports than to raise revenue proportionally.
On informal trade, the effect is unambiguous. Raising the gap between the formal and informal cost of importing a good increases the incentive to use the informal channel. That shifts activity away from state oversight, reduces revenue and disadvantages the compliant importers who form the formal private sector.
On the wider economy, import substitution in consumer goods is a strategy with a well-documented record. It can build domestic capacity where the sector is technologically simple, the domestic market is large enough for minimum efficient scale, and complementary inputs are available. It tends to fail where those conditions are absent, producing high-cost domestic production protected indefinitely behind tariffs that consumers pay for. Afghanistan meets the first condition in footwear and construction materials, has a market of roughly 40 million people, and is constrained severely on the third.
The revenue arithmetic
It is worth working through the revenue implications explicitly, because they cut against the stated industrial rationale in ways that will determine whether the package survives.
Customs duties are among the most administratively feasible taxes for a state with limited reach into the domestic economy. Collection happens at a small number of physical points, the tax base is observable, and the alternative revenue instruments, income tax and value added tax, require registration systems and audit capability that are expensive to build and easy to evade.
That makes the level at which a tariff is set a genuine trade-off rather than a technical detail. Revenue is maximised at an intermediate rate. Set the rate too low and the yield per unit is small. Set it too high and the volume collapses, either because consumption falls or because trade moves informal, and the yield falls with it.
The bottle and nappy increases, from 12 to 16 percent and from 20 to 25 percent respectively, sit comfortably in the range where revenue should rise. They are large enough to matter and small enough that they will not eliminate formal importation.
The footwear and plaster increases are different. Moving plastic footwear from 50 to 80 percent and plaster from 50 to 80 percent takes both well past the point at which the informal channel becomes overwhelmingly attractive, given the porousness of the borders and the established networks that run across them. The realistic expectation for those lines is falling recorded imports, flat or falling revenue, and a shift of activity outside the formal system.
If the objective is protection rather than revenue, that outcome is partially acceptable, since informal imports at least do not benefit from the state’s own tariff schedule. But informal imports compete with domestic producers exactly as formal ones do, and they do so without paying duty at all. A tariff that moves trade informal protects nobody.
The plausible reading is that the committee weighted protection over revenue for the goods where a domestic industry exists and wants shelter, and accepted the revenue consequence. Whether that judgment holds will depend on how the Ministry of Finance’s collection figures look over the coming quarters, and finance ministries are rarely indifferent to falling collections for long.
Implications for exporters and supply chains
For businesses trading with or through Afghanistan, several points follow.
Exporters of footwear, paint, plaster, bottles and nappies into the Afghan market should expect formal demand to contract. Pakistani, Chinese, Iranian and Turkish suppliers in these categories are the most exposed. Existing contracts should be reviewed for who bears the duty, and delivered-duty-paid terms into Afghanistan have just become considerably more expensive.
The absence of a stated effective date is a practical problem. The ministry did not say when the new rates apply. Goods in transit and goods already cleared for shipment sit in uncertainty, and importers should seek confirmation from Afghan customs before committing further consignments. Where a rate change is announced without an effective date, the safest working assumption is that it applies from publication of the implementing instrument rather than from the announcement.
Traders should also watch the harmonisation decisions on wires, iron nails, frozen potatoes and flavouring substances. Harmonisation generally means that goods previously classified at a lower rate will be reclassified upward to match related lines. Importers of those goods should expect classification disputes at the border and should obtain advance rulings where the mechanism exists.
For the regional logistics sector, the package adds to the friction on routes through Afghanistan. The country sits on the shortest land corridors between South Asia and Central Asia, and the viability of those corridors depends on predictable transit and customs treatment. Tariff volatility, even where it applies to imports for consumption rather than goods in transit, raises the perceived risk of routing through the country.
Finally, the episode illustrates something that applies well beyond Afghanistan. A growing number of economies outside the World Trade Organization’s disciplines, or operating at the edges of them, are setting applied tariffs by administrative decision in pursuit of industrial policy goals. For exporters, that means tariff risk in those markets cannot be assessed from bound rates or from legal commitments, because there are none. It has to be assessed from the political economy of the importing state, which is a considerably harder analysis and one that most export planning processes are not set up to perform.
What to watch
Three things will show whether the package achieves anything.
The first is publication of the implementing instrument and its effective date. Until that appears, importers cannot plan and the measure cannot be assessed. The ministry’s omission of a date in the announcement is itself a signal about administrative capacity.
The second is whether recorded imports in the affected categories fall and, if they do, whether domestic output rises correspondingly or the goods simply disappear from formal trade statistics. The gap between those two outcomes is the difference between industrial policy and revenue loss.
The third is the next Tariff Committee sitting. If it brings a further round of increases in adjacent consumer categories, the direction is established. If the committee instead spends its time on the harmonisation work already flagged for wires, iron nails, frozen potatoes and flavouring substances, the emphasis is on administration rather than protection.