- Rehan Ahmed
- Sep 16, 2025
Pakistan clinches breakthrough in US tariff negotiations
A mix of close strategic engagement and economic diplomacy led by finance minister Muhammad Aurangzeb, on Friday led to the United States agreeing to a 19 per cent additional tariff on Pakistan’s exports. The final outcome is a 10 percent reduction from the initially announced tariff of 29 percent by the United States.
This gives Pakistan a major advantage over its south Asian peers, notably exports by India in areas such as textiles and related products and rice. As Pakistan seeks to build up its exports to lift the country out of recurring challenges related to periodic foreign exchange shortages, it has secured an important edge.
The announcment came just days after the United States announced a 25 per cent additional tariff on Indian exports. Additionally, India’s exports will also face further penalties fori ts dealing with Russia. In south Asia, the additional US tariff on Bangladesh remains much higher than on Pakistan.
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The setback to India from US import tariffs has coincided with American sanctions on six Indian oil companies, for their dealings with Iran. In the past, the United States has also sanctioned at least four Indian shipping companies for transporting oil from Iran, in violation of US sanctions on Iran’s exports.
The latest outcome has followed a recent visit to the United States by Field Marshal Syed Asim Munir and his lunch meeting at the White House with US president Donald Trump. Separately, foreign minister Ishaq Dar also visited the United States for a meeting with American Secretary of State Marco Rubio.
But the key economic engagement led by finance minister Muhammmad Aurangzeb worked out specific details before the final outcome. The finance minister in his negotiations convinced US officials that a reduced tariff on Pakistan will be justifiable, without hurting US economic interests.
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In a related move on Wednesday Pakistan removed a five per cent ‘Digital Presence Proceeds Tax’ announced in the budget, targeting online purchases from Pakistan. The tax would have hit purchases from companies like Amazon and Temu that sell their products online. The tax on these companies was criticised by US businesses, seeking to build their online exports.
Going forward, Pakistan’s successful emergence from the tariffs related controversy, comes side by side with an important success story on the energy front. In Islamabad, a senior government official told Hum NEWS on Friday that the first shipment of US crude oil for Pakistan will be loaded later in August, to arrive in October. This follows earlier reports of Pakistan’s offer to buy US crude oil in order to narrow Pakistan’s trade surplus with the Unnted States.
In a related development, US president Donald Trump announced on Thursday that an agreement with Pakistan involved the US helping Pakistan to increase its oil exploration with the involvement of an American oil company. In the past, energy experts have said that Pakistan offers vast untapped opportunities for development of its oil and gas reserves. These include not just areas over land but also in the Arabian sea through offshore exploration.
