In a key development on the economic front, Pakistan and the United States have finalised a landmark agreement that not only promises to reduce tariffs on Pakistani exports but also paves the way for the development of Pakistan’s untapped oil reserves.
The move, being hailed by analysts as a strategic win for Islamabad, is expected to unlock wide-ranging benefits across trade, energy, and technology sectors.
“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,” US President Donald Trump wrote on social media on Wednesday.
“We are in the process of choosing the Oil Company that will lead this Partnership.”
Reacting to the development, Pakistan’s Finance Minister Muhammad Aurangzeb, in a video message on Thursday, termed the trade deal a “win-win” situation for both countries.
“We have come a long way in terms of our overall strategic partnership between Pakistan and the United States,” he said.
The agreement arrives just weeks before the expiration of a 90-day suspension on a proposed 29% tariff Trump had announced in April, which threatened to dent Pakistan’s export revenues.
According to Sana Tawfik, Head of Research at Arif Habib Limited, the deal will slash the tariff rate to an expected range of 15-20%, significantly mitigating potential export losses.
“If the 29% tariff was imposed, Pakistan could have faced losses to the tune of $1.1-1.4 billion in export revenue annually,” Tawfik told Business Recorder, citing data from the Pakistan Institute of Development Economics (PIDE).
“The deal will help minimise this loss,” she said.
Pakistan-US total goods trade was valued at 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.
Meanwhile, experts have termed the agreement a strategic and economic milestone.
“Very good development, beneficial for the country and industry,” said Samiullah Tariq, Head of Research at Pak-Kuwait Investment.
Saad Hanif, Head of Research at Ismail Iqbal Securities, praised the move as a bold diplomatic achievement.
“Pakistan has hit two birds with one stone, striking oil and securing trade relief in one bold diplomatic move,” he said.
Terming the agreement a significant step forward in strengthening bilateral economic ties, Saad said that Pakistan is expected to benefit from reduced tariffs on its exports to the US, helping safeguard its market access and boosting trade competitiveness.
“A major highlight of the deal is the US commitment to assist in the development of Pakistan’s oil reserves, signalling a strong vote of confidence in the country’s energy potential,” he said.
“Both nations have agreed to enhance cooperation across key sectors such as IT, digital infrastructure, mining, and cryptocurrency, paving the way for increased investment and technological collaboration.”
Saad said that the agreement not only reinforces Pakistan’s strategic importance in the region but also reflects growing economic alignment with the US, especially at a time when Washington is reevaluating trade relations with other South Asian economies.
“We are expecting broader economic implications through this deal – especially in sectors like energy, minerals (including Reko Diq), and agriculture,” added Tawfik.
