Pakistan and the United States reached a highly anticipated trade agreement on Thursday, just ahead of US President Donald Trump’s August 1 deadline, which was set to expire on Friday. Had an agreement not been reached, Washington would have imposed higher reciprocal tariffs against countries that failed to secure a deal.
This significant development emerged as Finance Minister Muhammad Aurangzeb achieved a breakthrough with the Trump administration during a meeting with US Secretary of Commerce Howard Lutnick and US Trade Representative Ambassador Jamieson Greer.
President Trump confirmed the agreement in a post on TruthSocial, stating, “We have just concluded a Deal with the Country of Pakistan.” While specific details of the trade deal have not yet been fully disclosed by either Islamabad or Washington, the Ministry for Finance has indicated that the agreement “will result in a reduction of reciprocal tariff, especially on Pakistani exports to the US.” This is expected to mark a fresh beginning in bilateral economic cooperation. The ministry also added that the deal aims to boost bilateral trade, improve market access, attract investment, and strengthen cooperation in areas of mutual interest.
Key Areas of Cooperation and US Investment
Expanding on a crucial aspect of the trade deal, President Trump stated that the two countries will “work together on developing their massive oil reserves” and are currently “in the process of choosing the oil company” that will lead this partnership. Under this understanding, Pakistan and the US will also focus on cooperation in energy, minerals, information technology, cryptocurrency, and other key areas.
Finance Minister Aurangzeb expressed that the deal is likely to attract significant US investment and reflects a broader economic and strategic partnership that is now taking shape between the two nations.
It’s important to note that Pakistan had been facing a potential 29% tariff on exports to the US. These tariffs were initially announced by Washington in April for various countries worldwide but were subsequently suspended for 90 days to allow for negotiations. Had these tariffs come into force, they would have had a substantial impact on Pakistan’s economy. According to the website of the Office of the US Trade Representative, the US’s total goods trade with Pakistan was an estimated $7.3 billion in 2024, an increase from approximately $6.9 billion in 2023. The US goods trade deficit with Pakistan stood at $3 billion in 2024, representing a 5.2% increase over 2023.
This agreement marks a critical moment for Pakistan’s trade relations, potentially averting significant economic headwinds and opening new avenues for cooperation and investment.
