On August 1, 2025, the United States implemented a 19% tariff on Pakistani goods, down from a previously proposed 29%, following a trade agreement finalized between the two nations. This deal, announced after talks led by Pakistan’s Finance Minister Muhammad Aurangzeb in Washington, DC, aims to boost bilateral trade and includes cooperation in developing Pakistan’s oil reserves, estimated by the US Energy Information Administration to hold up to 9.1 billion barrels of recoverable shale oil. The agreement also covers sectors like energy, mining, IT, and cryptocurrency, signaling a broader economic partnership.
Details of Tariff on Pakistani Goods
Pakistan, a major non-NATO ally, exported $5.5 billion in goods, primarily textiles, to the US in 2024, contributing to a $3 billion trade surplus. The reduced tariff rate offers Pakistan a competitive edge over regional rivals like India (25%) and Vietnam (20%), though challenges remain due to domestic issues like energy shortages and port inefficiencies. The US also imposed tariffs on 69 other countries, ranging from 10% to 41%, with Canada facing 35%, Brazil 50%, and Switzerland 39%, as part of a strategy to address trade deficits.
What’s Next
While the deal enhances Pakistan’s market access, analysts warn that the tariffs could increase consumer prices in the US and strain global trade relations. Pakistan’s textile sector, which accounts for 60% of its exports, faces pressure to maintain competitiveness amid these changes. The agreement’s focus on oil exploration, particularly in Balochistan and Khyber Pakhtunkhwa, could attract US investment, potentially mirroring successful models like Saudi Arabia’s Aramco, according to energy experts.
Published in SouthAsianDesk, August 1st, 2025
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