The US administration has imposed a 19% reciprocal tariff on a wide range of Pakistani goods, significantly lower than the initially proposed 29%, under a sweeping new executive order signed by President Donald Trump on Thursday.
Trump announced new tariffs of up to 41% on goods imported from dozens of countries, including Pakistan, citing persistent trade imbalances and a lack of reciprocity in bilateral trade relationships.
“Conditions reflected in large and persistent annual US goods trade deficits constitute an unusual and extraordinary threat to the national security and economy of the United States,” the executive order states.
Pakistan’s revised tariff rate of 19% is lower than that of several regional economies, including India (25%), Bangladesh (20%), Vietnam (20%), and Sri Lanka (20%).
“The new deal is expected to enhance market access for Pakistani goods, particularly in textiles and apparel,” Waqas Ghani, Head of Research at JS Global, told Business Recorder.
The analyst was of the view that this move could significantly boost export earnings and support industrial growth, which remained dull in the outgoing fiscal year.
“Pakistan will also begin importing crude oil from the US, which is a strategic shift in Pakistan’s energy procurement strategy, helping the country diversify its oil sources,” added Ghani.
“The relative advantage over many other countries sends a strong signal that the world acknowledges Pakistan’s improved fundamentals.”
The development came a day after the US administration struck a deal with Pakistan, in which Washington would work with Islamabad to develop the South Asian nation’s oil reserves.
“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 social media.
“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!”
Islamabad described the deal as a marker of a broader partnership with Washington. Finance Minister Muhammad Aurangzeb, who led the final round of talks, said there was a larger economic and strategic agreement.
“From our perspective, it was always going beyond the immediate trade imperative, and its whole purpose was, and is, that trade and investment have to go hand in hand,” he said, in video-taped remarks.
Pakistan faced a potential 29% tariff on exports to the United States under tariffs announced by Washington in April on countries around the world. Tariffs were subsequently suspended for 90 days so negotiations could take place.
Islamabad’s trade surplus with Washington was around $3 billion in 2024, mainly due to textile exports. The United States is Pakistan’s biggest market for textiles.
