Pakistan and the U.S. seem to be getting along and understanding each other. Unlike with other nations, there is no tension “yet” between the two nations since some tariff changes were made by President Donald Trump. New trade agreements are not often featured in the headlines that the general public rushes to read. However, behind the surface, there are frequently changes that have a long-term impact on industry, jobs, and international relations. With new agreements about energy and tariffs that both parties say would create new opportunities, Pakistan and the US signalled exactly that.
Lower tariffs: The USA and Pakistan are on good terms
The United States and Pakistan hailed a trade deal on Thursday that Islamabad said would lead to lower tariffs and increased investment, but without specifying the level of tariff to be levied on Pakistani exports. Islamabad described the deal as a marker of a broader partnership with Washington, and Finance Minister Muhammad Aurangzeb, who led the final round of talks, said there was a larger economic and strategic agreement.
In South Asia, Trump has repeatedly taken credit for a ceasefire agreed between India and Pakistan on May 10, after four days of conflict, saying he used the threat of restricting trade to get the two sides to halt hostilities. The Pakistan finance ministry said in a statement following a final round of talks in Washington,
“This deal marks the beginning of a new era of economic collaboration especially in energy, mines and minerals, IT, cryptocurrency and other sectors.”
He added,
“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.”
As Pakistan presses for a textile deal, the US halts its threat of tariffs
The nation of Pakistan had faced a potential tariff of 29%, which was later suspended, as with other nations, to allow trade talks up to an August 1 deadline. Islamabad was aiming at a tariff less than regional trade rivals such as Vietnam, which had a 20% tariff imposed by Trump, and India, which is threatened with a 25% tariff.
Islamabad’s trade surplus with Washington was around $3 billion in 2024, mainly due to textile exports. The United States is Pakistan’s biggest market for textiles. The finance ministry said the agreement would lead to a “reduction of reciprocal tariffs, especially on Pakistani exports to the United States”, but stopped short of revealing the figure.
Trump highlights the oil reserves agreement
President Trump was keen to highlight what he sees as the larger picture—American corporations expanding their involvement in Pakistan’s energy industry—while Pakistan concentrated on exports. American companies will assist in the exploration and development of oil reserves that Pakistan has found difficult to fully exploit.
Proponents claim that Pakistan, which imports petroleum worth billions of dollars, might benefit from investment, technology, and improved energy security. The decision is about “keeping jobs at home while helping our friends unlock what they have under their feet,” Trump said. Although it is too early to determine how much oil can be produced realistically. On the other hand, in Pakistan, critics face YouTube bans amid a political crackdown.
The tariff situation seems to be looking good for Pakistan; however, for other countries, it has gotten to a situation where the G20 are meeting in South Africa amid tariff worries, and having said that, it is important to notice that despite the smiles during press conferences, both nations are aware that these kinds of agreements might encounter challenges. Pakistan’s economy continues to struggle with debt and the need for significant reforms. Regarding energy, it might take years and enormous financial outlays for oil exploration initiatives to provide results.