LAHORE:Pakistan reached a much-awaited trade agreement with the United States on Thursday ahead of the US President Donald Trump’s August 1 deadline set to expire on Friday (tomorrow) — after which Washington will impose a higher tariff against the countries on a reciprocal basis.
The development came as Finance Minister Muhammad Aurangzeb reached a breakthrough with the Trump administration in a meeting with the US Secretary of Commerce Howard Lutnick and US Trade Representative Ambassador Jamieson Greer.
“We have just concluded a Deal with the Country of Pakistan,” President Trump said in a post on TruthSocial.
Although specific details have not surfaced either from Islamabad or Washington on the trade deal, the Ministry for Finance has said that the agreement “will result in a reduction of reciprocal tariff, especially on Pakistani exports to the US” — leading to a fresh beginning in bilateral economic cooperation.
The deal, the ministry adds, aims to boost bilateral trade, improve market access, attract investment, and strengthen cooperation in areas of mutual interest.
Expanding on a key aspect of the trade deal, President Trump said that the two countries will “work together on developing their massive oil reserves” and were currently “in the process of choosing the oil company” which will be leading this partnership.
Under the said understanding, Pakistan and the US will also focus on energy, minerals, information technology, cryptocurrency, and other key areas.
With the trade deal likely to attract US investment as well, FinMin Aurangzeb said that the development reflected a broader economic and strategic partnership that’s now taking shape.
It is pertinent to mention that Pakistan faced a potential 29% tariff on exports to the US under tariffs announced by Washington in April on countries around the world. Tariffs were subsequently suspended for 90 days so negotiations could take place.
The tariffs, if they had come into force, would have had a significant impact, as the US total goods trade with Pakistan was an estimated $7.3 billion in 2024, according to the website of the Office of the US Trade Representative, up from around $6.9 billion in 2023.
The US goods trade deficit with Pakistan was $3 billion in 2024, a 5.2% increase over 2023.
