By Staff Reporter
KARACHI: President Donald Trump said on Wednesday his administration has struck a trade deal with Pakistan to develop the South Asian nation’s oil reserves, while simultaneously imposing a 25% tariff on Indian imports, escalating tensions with New Delhi over trade imbalances and its energy ties with Russia.
The agreement with Pakistan, revealed in a social media post, centres on a joint effort to tap the country’s oil reserves. “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. Who knows, maybe they’ll be selling Oil to India some day!”
Trump’s social media post did not provide further details on the deal between the US and Pakistan.
Pakistan’s finance ministry in a statement issued early Thursday said the country and the United States finalised a trade agreement on Wednesday to bolster bilateral commerce, widen market access, and draw US investment into the South Asian nation’s economy.
The deal, sealed during a Washington, D.C., meeting, slashes reciprocal tariffs, particularly on Pakistani exports to the U.S., and targets cooperation in energy, mines and minerals, information technology, and cryptocurrency.
Finance Minister Senator Muhammad Aurangzeb led the talks alongside US Commerce Secretary Howard Lutnick and US Trade Representative Ambassador Jamieson Greer. Pakistan’s Commerce Secretary Jawad Paul and Ambassador to the US Rizwan Saeed Sheikh also attended.
“The agreement will result in reduction of reciprocal tariff especially on Pakistani exports to the United States,” the ministry said in a statement. “This deal marks the beginning of a new era of economic collaboration especially in energy, mines and mineral, IT, cryptocurrency and other sectors.”
The pact aligns with Pakistan’s drive to deepen economic ties with the U.S., including state-level partnerships. It’s expected to unlock greater market access for both nations and spur U.S. funding for Pakistan’s infrastructure and development projects.
The ministry hailed the agreement as a milestone, saying it “underscores the commitment of both nations to deepen their bilateral relationship and explore all avenues for strengthening trade and investment ties.”
Aurangzeb, in a video message released by the Ministry of Finance, called the agreement a “win-win” for both sides. “Today marks the culmination of the journey that we started a few months back,” he said, pointing to a “very constructive final round of discussions” that sealed the pact. The breakthrough followed months of negotiations, with the U.S. having suspended a looming 29% tariff on Pakistani exports for 90 days to give talks a chance.
The agreement was hashed out in a high-level meeting in the US capital, where Aurangzeb sat across from U. Secretary of Commerce Howard Lutnick and United States Trade Representative Ambassador Jamieson Greer. Pakistan’s Secretary of Commerce Jawad Paul and Ambassador to the US, Rizwan Saeed Sheikh, also joined the talks.
Aurangzeb underscored that the deal goes beyond just trade. “From our perspective, we were always going beyond the trade imperative,” he said. “Trade and investments have to go hand in hand.” He highlighted a slate of sectors ripe for US investment, starting with energy and extending to mineral and mining, IT, and what he dubbed “the new economy.”
“We are in a good place today in Pakistan, in terms of where we have arrived before August 1,” the minister said. “We have come a long way in terms of our overall strategic partnership between Pakistan and the United States.”
The trade negotiations began with a telephonic conference call in May between Aurangzeb and US Trade Representative Jamieson Greer, focusing on reciprocal tariffs. The dialogue gained momentum after the US proposed a 29% duty on Pakistani exports, a decision it later suspended temporarily. By July, talks in Washington had advanced to their final stage, with Aurangzeb calling the process “very constructive” and underscoring a joint resolve to tackle remaining hurdles and finalise a broad economic framework.
Pakistani officials said the trade deal is set to broaden cooperation into non-traditional sectors like information technology, agriculture, and minerals, areas flagged for their substantial growth potential.
They emphasised that strong trade and economic ties form the bedrock of Pakistan-US relations, with the US remaining Pakistan’s top trading partner. Pakistan is pushing to elevate bilateral trade beyond conventional goods, eyeing US investment in key sectors such as energy and mining.
The US stands as Pakistan’s largest export market, a lifeline now under pressure from the fresh duties. Pakistan shipped $5.44 billion in goods to the US in 2024, per central bank data, with exports climbing 10% to $4 billion from July to February of the current fiscal year compared to the prior period. That’s left Islamabad with a $3 billion trade surplus with the US. Textiles dominate the mix, making up nearly 90% of those exports. Pakistan is also the second-largest buyer of US cotton in South Asia after China.
Tariffs Target India
Hours earlier, Trump announced the 25% tariff on Indian imports, effective August 1, alongside unspecified additional penalties. The move, aimed at addressing the US trade deficit with India and its purchases of Russian oil, will hit Indian exports valued at roughly $87 billion in 2024. Affected goods include garments, pharmaceuticals, gems and jewelry, and petrochemicals—sectors that employ millions.
India’s trade practices have long drawn Trump’s ire. “While India is our friend, we have, over the years, done relatively little business with them because their Tariffs are far too high, among the highest in the World, and they have the most strenuous and obnoxious non-monetary Trade Barriers of any Country,” he wrote on Truth Social.
He also criticized India’s reliance on Russian military equipment and energy, noting, “They are Russia’s largest buyer of ENERGY, along with China, at a time when everyone wants Russia to STOP THE KILLING IN UKRAINE — ALL THINGS NOT GOOD!”
The tariffs threaten to strain ties with a key US strategic partner often seen as a counterweight to China. The White House has previously flagged India’s steep tariffs, averaging 39% on agricultural goods, with rates as high as 45% on vegetable oils and 50% on apples and corn, as a sticking point in trade talks.
S.C. Ralhan, president of the Federation of Indian Export Organisation, warned of the fallout. “This is a major setback for Indian exporters, especially in sectors like textiles, footwear, and furniture, as the 25% tariff will render them uncompetitive against rivals from Vietnam and China,” he said.
Despite the hard line, Trump hinted at flexibility. “They have one of the highest tariffs in the world now, they’re willing to cut it very substantially,” he told reporters at the White House. “We’re talking to India now, we’ll see what happens… You’ll know by the end of this week.”
White House economic adviser Kevin Hassett said Trump’s frustration with slow trade talks prompted the tariff move, adding that details on the additional penalty would emerge “shortly.”
India’s government responded cautiously, saying it was assessing the announcements and remained committed to a fair trade deal with the US.
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