Pakistan and the United States have finalized a trade agreement focused on reducing reciprocal tariffs, especially on Pakistani exports to the U.S.
The deal was signed during a meeting in Washington between Pakistan’s Finance Minister Muhammad Aurangzeb and U.S. officials, including Secretary of Commerce Howard Lutnick and Trade Representative Jamieson Greer. President Donald Trump announced the agreement via Truth Social.
The agreement will result in reduction of reciprocal tariff especially on Pakistani exports to the United States. Pakistan’s Finance Ministry confirmed this as the primary feature of the trade pact.
The tariff reduction is expected to support Pakistan’s textile, leather, surgical, and IT sectors by improving their cost competitiveness in the U.S. market. It also opens new opportunities in mining, energy, and digital services under U.S. investment plans.
On the same day, the U.S. imposed a 25% tariff on Indian imports, effective August 1, citing India’s high trade barriers and ongoing purchases of Russian oil and military hardware. The move includes additional penalties.
Trade analysts anticipate that the tariff increase on India will decrease the amount of exports to the U.S. by the Indians. Consequently, Pakistani exporters can enjoy the higher demand in areas that have been dominated by the Indian suppliers so far.
The value of the Pakistan exports to the U.S. in the year 2024 was around $6-7 billion. This volume is expected to increase considerably in the year 2025 with the lower tariffs. The trade flows may shift to Pakistan because of this policy shift.