Pakistan announced a deal with the US that it expects will reduce tariffs on its exports.
Meanwhile, President Donald Trump lauded an agreement focused on developing Pakistan’s oil reserves, according to a Reuters report.
However, the agreed tariff rate was not mentioned by either party.
In an effort to counter China’s regional influence, Washington designated Pakistan a “major non-NATO ally.” Pakistan was facing a potential 29% tariff, announced in April, which was subsequently suspended for 90 days to facilitate trade discussions.
“We have just concluded a Deal with the Country of Pakistan, whereby Pakistan and the United States will work together on developing their massive Oil Reserves,” Trump wrote on social media.
We are in the process of choosing the Oil Company that will lead this Partnership.
Newfound economic cooperation
Pakistani Foreign Minister Ishaq Dar confirmed the agreement, stating, “Deal concluded,” but offered no further details, according to the report.
Pakistan’s finance ministry announced on Thursday that a tariff deal, though not mentioned by Trump, would result in “reduction of reciprocal tariffs, especially on Pakistani exports to the United States.” The specific figures, however, were not disclosed.
The ministry added:
This deal marks the beginning of a new era of economic collaboration especially in energy, mines and minerals, IT, cryptocurrency and other sectors.
Finance Minister Muhammad Aurangzeb, who led the final round of talks in Washington, described the deal as a win-win for both nations.
“From our perspective, it was always going beyond the immediate trade imperative, and its whole purpose was, and is, that trade and investment have to go hand in hand,” he added in the statement.
Following his Friday meeting with Secretary of State Marco Rubio, Dar indicated last week that the two nations were “very close” to finalizing a trade deal, potentially within days.
Discussions were held regarding the expansion of trade and strengthening of ties in critical minerals and mining. Other Pakistani officials have also visited recently for talks.
US trade policy under Trump
Washington, under Trump’s leadership, has aimed to renegotiate numerous trade agreements. Trump has threatened tariffs on several countries, deeming their trade relations “unfair,” a label many economists contest.
According to the US Trade Representative’s website, total goods trade between America and Pakistan reached an estimated $7.3 billion in 2024, an increase from approximately $6.9 billion in 2023.
The goods trade deficit with Pakistan reached $3 billion in 2024, marking a 5.2% increase from the previous year.
Trump announced that a 25% tariff on goods imported from Pakistan’s primary rival would commence on Friday, adding that Washington was still engaged in trade negotiations with India.
De-escalation of tensions
Pakistan recently commended the “pivotal role” played by Trump and Rubio in “de-escalating tensions between Pakistan and India through facilitating a ceasefire.”
Trump has consistently attributed the India-Pakistan ceasefire, which he announced on social media on May 10, to Washington’s discussions with both nations.
India asserts that the ceasefire was not a result of Trump’s intervention or trade threats, maintaining its stance that New Delhi and Islamabad should resolve their issues bilaterally without external involvement.
The recent escalation in the long-standing India-Pakistan conflict stemmed from a deadly militant attack on April 22 in India-administered Kashmir, which India attributed to Pakistan.
Islamabad, however, denied any responsibility. Following this, India launched a strike on Pakistan on May 7, leading to a period of intense hostilities until a ceasefire was declared.
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