Pakistan and US Finalize Landmark Economic Agreement

In a significant economic advancement, Pakistan and the United States have officially agreed on a vital accord designed to lower tariffs on Pakistani exports and facilitate the development of Pakistan’s untapped petroleum resources.

Analysts are applauding the action as a calculated triumph for Islamabad, predicting it will stimulate widespread advantages in the trade, energy, and technology sectors.

“We have just finalized an agreement with Pakistan, through which Pakistan and the United States will collaborate to develop their substantial oil reserves,” stated US President Donald Trump via social media on Wednesday.

“We are currently in the selection phase for the oil firm that will spearhead this collaboration.”

Pakistan’s Finance Minister Muhammad Aurangzeb, addressing the matter in a video statement on Thursday, characterized the trade arrangement as mutually advantageous for both nations.

“Our comprehensive strategic alliance between Pakistan and the United States has progressed significantly,” he noted.

This agreement is reached just prior to the end of a 90-day reprieve on a proposed 29% tariff that Trump had declared in April, which posed a threat to Pakistan’s export earnings.

According to Sana Tawfik, Head of Research at Arif Habib Limited, the agreement is expected to reduce the tariff rate to between 15% and 20%, which will greatly lessen potential export deficits.

“Pakistan could have potentially encountered losses of approximately $1.1 to $1.4 billion in annual export revenue if the 29% tariff had been enforced,” Tawfik informed Business Recorder, referencing data from the Pakistan Institute of Development Economics (PIDE).

“This deal will be instrumental in minimizing these losses,” she added.

As per the Office of the US Trade Representative, total trade in goods between the US and Pakistan reached an estimated $7.3 billion in 2024, up from nearly $6.9 billion in 2023. The US goods trade shortfall with Pakistan amounted to $3 billion in 2024, marking a 5.2% increase from 2023.

Experts are viewing the agreement as both a strategic and economic landmark.

“This is a highly positive development that will benefit the country and its industries,” commented Samiullah Tariq, Head of Research at Pak-Kuwait Investment.

Saad Hanif, Head of Research at Ismail Iqbal Securities, commended the move as a courageous diplomatic achievement.

“Pakistan has successfully achieved two objectives simultaneously: securing trade relief and discovering oil through a bold diplomatic maneuver,” he stated.

Saad characterized the agreement as a pivotal advancement in enhancing bilateral economic relations, noting that Pakistan stands to gain from reduced tariffs on exports to the US, thereby protecting market access and improving trade competitiveness.

“A key highlight of this agreement is the US commitment to aid in the advancement of Pakistan’s oil reserves, which demonstrates a strong endorsement of the nation’s energy capabilities,” he elaborated.

“Both countries have consented to enhance collaboration across vital sectors like IT, digital infrastructure, mining, and cryptocurrency, setting the stage for greater investment and technological partnerships.”

Saad further stated that the agreement not only solidifies Pakistan’s strategic significance in the region but also underscores growing economic synergy with the US, particularly as Washington reassesses trade relations with other South Asian economies.

“We anticipate broader economic consequences stemming from this agreement, particularly in sectors such as energy, minerals (including Reko Diq), and agriculture,” Tawfik added.