By Staff Reporter
KARACHI: Pakistan has emerged as a rare winner in President Donald Trump’s sweeping overhaul of US trade policy, securing a tariff reduction from 29% to 19% on Friday, the lowest rate for any South Asian country after Afghanistan.
The move came alongside a landmark deal with the United States to jointly develop Pakistan’s oil reserves, a pact Trump touted as a step toward tapping “massive” resources in the nuclear-armed nation.
While 69 countries face higher US tariffs under a new executive order targeting “unfair trade practices,” Pakistan’s agreement signals a deepening economic and strategic partnership with Washington, even as regional rivals like India, Bangladesh, and Vietnam grapple with steeper duties.
The tariff slashing for Pakistan stands in stark contrast to Trump’s broader policy, unveiled on Friday in an executive order that imposed levies as high as 41% on Syria and hiked Canada’s rate from 25% to 35%.
India’s tariff remained unchanged at 25%, as announced earlier this week, amid ongoing tensions over its oil purchases from Russia. The order, effective in one week, reflects Trump’s push to protect U.S. economic and national security interests, targeting nations he says have failed to address trade imbalances or align with American priorities.
“This is about fairness,” Trump wrote in a social media post revealing the Pakistan deal a day earlier. “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. 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!”
The post offered no further specifics, but it underscored the administration’s focus on leveraging trade to reshape geopolitical ties.
Pakistan’s Finance Ministry hailed the agreement as a “milestone” in bilateral relations. The deal, sealed during talks led by Finance Minister Senator Muhammad Aurangzeb, U.S. Commerce Secretary Howard Lutnick, and U.S. Trade Representative Ambassador Jamieson Greer also opens the door to cooperation in energy, mining, IT, and cryptocurrency.
“This deal marks the beginning of a new era of economic collaboration.” Aurangzeb, in a video message, called it a “win-win” for both nations. “Today marks the culmination of the journey that we started a few months back,” he said, crediting a “very constructive final round of discussions.”
He emphasized that the pact transcends trade, targeting “trade and investments” in tandem across sectors like energy and “the new economy.” “We are in a good place today in Pakistan, in terms of where we have arrived before August 1,” Aurangzeb added. “We have come a long way in terms of our overall strategic partnership between Pakistan and the United States.”
The stakes are high for Pakistan, where the US is the largest export market. In 2024, Pakistan shipped $5.44 billion in goods to the US, with exports climbing 10% to $4 billion from July to February of the current fiscal year, yielding a $3 billion trade surplus.
Textiles, accounting for nearly 90% of those exports, stand to gain a competitive edge as rivals like India, Bangladesh, and Vietnam face higher tariffs. Pakistan also ranks as South Asia’s second-largest buyer of US cotton after China, cementing its economic ties with Washington.
Trump’s executive order painted a broader picture of his trade agenda, stating that some partners, “despite having engaged in negotiations, have offered terms that, in my judgment, do not sufficiently address imbalances in our trading relationship or have failed to align sufficiently with the United States on economic and national-security matters.”
While Pakistan secured a reprieve, Canada faced a sharp increase to 35%, tied partly to fentanyl-related concerns, while Mexico won a 90-day window to negotiate further, avoiding a 30% hike for now.
India, meanwhile, remains a flashpoint. US Secretary of State Marco Rubio on Thursday called New Delhi’s oil purchases from Russia “most certainly a point of irritation” in its relationship with Washington. Though India’s 25% tariff held steady, talks have stalled over access to its farm sector, prompting Trump to threaten steeper duties and an unspecified penalty for its Russian ties.
New Delhi’s vow to shield its labor-intensive agriculture has sparked domestic backlash and weakened the rupee. Back in Washington, a Trump administration official, speaking anonymously, hinted at more to come.
“We have some deals,” the official told reporters. “And I don’t want to get ahead of the President of the United States in announcing those deals.” With new rates set to take effect next week, businesses and governments worldwide are scrambling to adapt.
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