ISLAMABAD/WASHINGTON/NEW DELHI: Pakistan and the USA struck a trade deal under which reduced tariffs on reciprocal basis will help boost bilateral trade, expand market access, attract investment, and foster cooperation in areas of mutual interest.
There is a possibility that the USA will impose a tariff in the range of 15 to 19 percent on Pak made-ups, which might be lower than India. President Trump announced imposition of 25 tariff on India. The mutual cooperation in oil exploration can be one of the biggest areas where both sides are eyeing to establish close liaison. If Pakistan remains able to get reduced tariff by 5 to 10 percent than regional and competing economies including Bangladesh, Indonesia, Vietnam and others, then exports of Pakistani products could go up by 10 to 15 percent in the first fiscal year.
It could further go up in the coming years provided the industry undertook BMR (Balancing, Modernization, and Replacement) to investments made to improve the existing industrial units through the purchase of new machinery, to enhance efficiency, product quality, and competitiveness.
Pakistan will provide tariff incentives on import of cotton, soybean and POL products from USA. However, in case of importing POL products as WTI from USA, the rough calculation done by Pakistani side has assessed that the prices of POL in the domestic market might go up by Rs1 to Rs1.50 per liter at the retail stage.
The exact calculation cannot be done because there are some reports published in the international media outlets that US was making increased selling commitment than its production of oil.
Pakistan will have to reciprocate similarly to USA. For instance, Islamabad waived off 5 percent tax on digitally ordered goods and services from abroad including USA and China.
According to an official statement issued by the finance ministry, Pakistan and United States successfully concluded the landmark trade deal.
The breakthrough was reached during a meeting of Finance Minister Senator Muhammad Aurangzeb, with U.S. Secretary of Commerce Howard Lutnick and United States Trade Representative Ambassador Jamieson Greer in Washington, D.C.
Secretary Commerce Jawad Paul and Pak Ambassador to the United States Ambassador Rizwan Saeed Sheikh were also present during the meeting. President Trump announced the trade deal via a post on Truth Social.
The agreement will result in reduction of reciprocal tariff, especially on Pakistani exports to the United States.
This deal marks the beginning of a new era of economic collaboration especially in energy, mines and mineral, IT, cryptocurrency and other sectors.
The deal complements Pakistan’s existing efforts of broadening the scope of Pak-US economic ties.
The agreement enhances Pakistan’s access to the US market and vice versa. Additionally, the deal is expected to spur increased US investment in Pakistan’s infrastructure and development projects.
This trade agreement underscores the commitment of both nations to deepen their bilateral relationship and explore all avenues for strengthening trade and investment ties.
Minister for Finance Muhammad Aurangzeb said the trade and investment will have to go hand in hand and larger bilateral economic partnership and strategic partnership surfaced as the major outcome.
“I want to thank all those involved in this process, including the role of the private sector. The trade balance will be curtailed and the private sector was the first constituent which offered the government to help achieve the desired results,” he said.
“This is a team work where we have delivered. In future, it would be a win-win situation both for Pakistan and USA. There will be a number of sectors for investment and first of all energy will be the starting point then mineral and mining, IT and other sectors will be followed. We are in a good place today in terms of overall strategic partnership,” he said.
AFP adds: In a social media post sent at midnight Wednesday President Donald Trump confirmed the finalisation of a trade agreement — a move that signals growing trust and deepening economic ties between Islamabad and Washington.
“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 the social media.
“We are in the process of choosing the oil company that will lead this partnership.”
Trump labeled Russia and US ally India “dead economies,” indicating that his threat to ramp up tariffs on New Delhi will now go ahead.
Trump said, “I don´t care what India does with Russia. They can take their dead economies down together, for all I care.”
“We have done very little business with India, their tariffs are too high, among the highest in the world. Likewise, Russia and the USA do almost no business together. Let´s keep it that way,” he added, reports AFP.
The statement on Truth Social followed Trump’s announcement Wednesday that India will face 25 percent tariffs, while also announcing an unspecified “penalty” over New Delhi’s purchases of Russian weapons and energy. Trump, 79, said the tariffs would kick in on Friday (today).
He gave no indication in either announcement about what penalties would be imposed for India’s continued trade with Russia, which is under massive US and Western sanctions over its invasion of Ukraine.
APP adds: Prime Minister Shehbaz Sharif Thursday expressed his gratitude to President Trump for his role in finalising a historic trade agreement between Pakistan and the United States.
“I wish to convey my profound thanks to President Trump for his leadership role in finalization of the historic US-Pakistan trade agreement, successfully concluded by our two sides in Washington, last night,” the prime minister wrote on his X timeline.
He said the “landmark” deal would enhance the bilateral growing cooperation to expand the frontiers of enduring partnership in days to come.
KMS reports: In a related development, the Indian opposition parties have launched a scathing attack on the BJP-led Indian government after Trump imposed a 25 percent tariff and penalties on Indian imports, saying Prime Minister Narendra Modi’s much-touted personal rapport with the US president had failed to deliver any tangible benefits for India.
According to the Kashmir Media Service, Congress General Secretary Jairam Ramesh took to X to express his criticism. “President Trump has slapped a tariff of 25 percent plus penalty on imports from India. All that ‘taarif’ between him and ‘Howdy Modi’ has meant little.”
Taking a jibe at Modi, Trinamool Congress’s (TMC) Rajya Sabha leader Derek O’Brien posted a video clip of Modi praising Trump and chanting “Abki Baar Trump Sarkar” during a previous public event. “Now what will the ‘56-inch chest’ say about this brutal 25% Trump tariff? Remember this…” O’Brien wrote on X.
Talking to reporters at the Parliament complex, Rashtriya Janata Dal (RJD) MP Manoj Jha also expressed disappointment. “We are not very happy that it has happened under the rule of Prime Minister Modi”, he said adding the government must acknowledge its shortcomings and take the nation into confidence.
Communist Party of India (CPI) MP P Sandosh Kumar described Trump’s decision as “another insult to India”. “While the trade-agreement discussions are going on, on one side, Trump is insulting Indian interests,” he told reporters at the Parliament complex.
Congress leader Manickam Tagore squarely blamed the Modi government for the situation. “This is the failure of the Modi government. The external affairs minister has failed. ‘Howdy Modi’, ‘Abki Baar Trump Sarkar’ — there were such slogans. Wherever Modi was going, he wanted to see how many awards he collects…. India’s interest was compromised and Modi’s PR was a priority. With that approach, India has become weak,” he told reporters.
