U.S. trade deal : ‘Balanced and Bold’, ‘forward-looking’: Pakistan hails 19% tariffs

Pakistan on Friday (August 1, 2025) announced that the U.S. has imposed a 19% tariff on its exports and termed the step as a “balanced and forward-looking” move that enhances the country’s competitiveness in the American market.

The new rate is down from the previous 29% tariff announced by U.S. President Donald Trump.

Welcoming the “successful conclusion” of the tariff-related discussions with the U.S., the Ministry of Foreign Affairs in a statement said, “As per the outcome of these talks, a tariff of 19% will be applicable for Pakistani exports to the U.S. market.” The decision reflected a “balanced and forward-looking approach by the U.S. authorities, keeping Pakistan competitive relative to other South and Southeast Asian countries”, it said.

The Ministry said the revised tariff level is expected to support Pakistan’s export potential, especially in key sectors such as textiles, “which remain the backbone of the country’s export economy”.

Pakistan’s exports to the U.S. rose by 11.06% to $5.552 billion from $4.999 billion in the first 11 months of the last fiscal.

The Ministry said the current tariff presented a “significant opportunity to expand Pakistan’s footprint in the U.S. market”.

“It is now essential for Pakistani exporters and trade bodies to adopt an aggressive and focused marketing strategy to capitalise on this development,” it said.

The statement also pointed out a substantial potential for growth in other sectors.

“The Government of Pakistan looks forward to further positive engagements and close cooperation with the United States in the areas of investment, artificial intelligence, crypto currency, mines and minerals, energy, and other emerging sectors,” it said.

The Ministry said Pakistan will continue to engage closely with Mr. Trump and the U.S. administration to promote the shared goals of economic development and mutual prosperity.

The revised tariff for Pakistan came after the U.S. and Islamabad finalised a trade deal in Washington on Wednesday.

In a social media post on Wednesday, the U.S. President said, “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.” However, it was not immediately clear what massive oil reserves in Pakistan Mr. Trump was referring to.

Meanwhile, Khurram Schehzad, Adviser to Pakistan’s Finance Minister, in a social media post said, “Pakistan is possibly the only country which the U.S. has offered its investments as well, besides a competitive trade deal.” The “deal signals a strategic deepening of economic ties and shared growth”, he said.

Pakistan has long claimed to have large oil deposits along its coast, but no progress has been made to tap those deposits. It has been trying to lure in investments to tap into these reserves.

The country currently imports oil from West Asia to meet its energy demands.

Mr. Trump on Thursday signed an executive order that raised tariffs for over five dozen countries with Washington’s negotiations for trade deals went down to the wire ahead of the August 1 deadline.

The tariffs in the list range from 10% to 40%, with Japan being charged 15%, Laos and Myanmar (40% each), Sri Lanka (20%) and the United Kingdom (10%).

In a world where trade wars, protectionist policies, and shifting alliances dominate headlines, Pakistan has carved out a small but meaningful victory. On August 1, 2025, the United States announced its latest tariff regime under President Donald Trump’s administration, imposing steep duties on a range of countries. Among the winners in this wave of negotiations was Pakistan, which secured a 19% tariff rate—a figure lower than the 29% initially proposed and notably better than several of its regional competitors.

Islamabad has hailed this outcome as both “balanced” and “forward-looking”, recognizing its potential to strengthen exports, especially textiles, and open avenues for broader economic cooperation. But beyond the optimism, the deal comes with challenges and responsibilities. Let’s explore what this really means for Pakistan, its exporters, and its place in global trade.

Why the 19% Tariff Matters

Tariffs directly impact the competitiveness of a country’s exports. Higher duties make goods more expensive in foreign markets, reducing demand. For Pakistan, whose export profile is dominated by textiles—garments, fabrics, and home furnishings—the tariff rate can make or break market access in the U.S., one of its largest trading partners.

By settling at 19%, Pakistan avoided a much harsher blow. To put this into perspective:

• India was hit with a 25% tariff after negotiations failed.

• Bangladesh, another textile powerhouse, landed a 20% tariff.

• Iraq faced an even steeper 35% duty.

This places Pakistan in a relatively competitive position in South Asia, providing exporters a slight but significant edge. For a country battling trade deficits and foreign exchange challenges, that edge is nothing short of vital.

Immediate Relief for the Textile Sector

The textile industry makes up nearly 77% of Pakistan’s export earnings. Over the past decade, the sector has suffered from rising energy costs, outdated machinery, inconsistent policies, and stiff global competition. The U.S. tariff deal, therefore, offers a much-needed breather.

Industry associations have already expressed relief, noting that this reduction could translate into higher orders from U.S. buyers, particularly those shifting supply chains away from China and India. However, the benefits will only materialize if exporters can seize the opportunity with efficient production, timely delivery, and aggressive marketing.

The government, too, has urged exporters to think beyond short-term gains. Officials emphasized that this deal is not just a tariff concession—it’s an invitation to restructure trade strategies, diversify product lines, and enter niche markets in the U.S.

A Doorway to Wider Cooperation

While the tariff rate has grabbed headlines, there’s more to this agreement than duties on textiles. During discussions in Washington, Pakistan’s finance and foreign ministers also laid out a vision for expanded cooperation in:

• Investment and technology – attracting U.S. firms to Pakistan’s growing digital economy.

• Artificial intelligence and cryptocurrency – emerging areas where Pakistan wants to position itself regionally.

• Mines and minerals – leveraging untapped reserves to diversify export revenues.

• Energy – including a high-profile mention of developing Pakistan’s oil reserves with U.S. assistance.

President Trump’s hint at “massive oil reserves” raised eyebrows, given Pakistan’s modest proven deposits. But symbolically, this shows the U.S. willingness to explore energy collaboration, something Islamabad has long sought.

The Diplomatic Angle

Every trade deal carries a political undertone. This agreement arrives at a moment when U.S.–India ties face strains, particularly on trade and defense. By extending a comparatively favorable tariff rate to Pakistan, Washington signals an intent to balance relationships in South Asia.

For Pakistan, the deal is an opportunity to shed the narrative of being seen solely through a security lens and instead highlight its potential as a serious economic partner. Officials have stressed that this is a shift from transactional interactions to a more sustainable, trade-driven partnership.

Challenges and Caveats

Despite the celebration, several challenges remain:

1. Narrow Export Base – Pakistan relies heavily on textiles, making it vulnerable to shocks in a single sector. Without diversification into IT, pharmaceuticals, or value-added agriculture, tariff relief may not be enough for long-term growth.

2. Productivity and Innovation Gaps – Many industries still depend on outdated technology and low-skilled labor. Competing with Bangladesh or Vietnam requires innovation, automation, and skill development.

3. Oil and Energy Realities – While U.S. cooperation on oil sounds promising, Pakistan’s recoverable reserves are limited, and security concerns in regions like Balochistan complicate exploration.

4. Unpredictable U.S. Policy – President Trump’s trade stance is famously transactional. A shift in U.S. politics could mean today’s concessions turn into tomorrow’s penalties. Relying too heavily on one deal may prove risky.

Regional Comparisons

The 19% tariff is particularly significant when viewed regionally:

• India’s 25% tariff could redirect some U.S. buyers toward Pakistan.

• Bangladesh at 20% remains close, meaning Pakistan must maintain efficiency to preserve its advantage.

• Countries facing tariffs above 30% will likely lose competitiveness, giving Pakistan a short-term opportunity to grab market share.

This competitive window, however, will not remain open indefinitely. Pakistan must act quickly to cement its place in U.S. supply chains before others catch up.

Looking Ahead

The government is calling this a “forward-looking” deal for a reason. It not only eases export barriers but also signals a chance to redefine Pakistan’s trade identity. If exporters, policymakers, and investors work in sync, this could be the beginning of a stronger bilateral economic partnership.

Yet, the sustainability of this win depends on domestic reforms—streamlining regulations, improving infrastructure, investing in renewable energy, and supporting innovation. Without these, the tariff concession may end up as a short-lived advantage rather than a transformational change.

Pakistan’s description of the U.S. trade deal as both “balanced and bold” reflects more than just relief over numbers on a tariff sheet. It signifies a deliberate effort to reposition itself in a turbulent global economy where tariffs and trade wars often determine diplomatic alignments. The 19% tariff rate—secured after weeks of negotiations—positions Pakistan as a competitive supplier in the U.S. market while symbolizing a maturing diplomatic strategy that blends pragmatism with ambition.

By framing the agreement as “forward-looking,” Islamabad is signaling its intent to move beyond transactional ties. Instead of simply reacting to global tariff pressures, Pakistan is attempting to craft a proactive narrative where trade becomes a tool of long-term partnership, not short-term concession. This marks a subtle but important shift in how Pakistan engages with Washington—one that leans on economic potential rather than security anxieties.

Strengthening the Export Base

The 19% tariff is expected to benefit Pakistan’s textile exporters first and foremost. With India facing 25% tariffs and Bangladesh settling at 20%, Pakistan gains a modest but real competitive advantage. This breathing space offers exporters an opportunity to expand market share, build relationships with U.S. buyers, and project Pakistan as a reliable sourcing hub.

But officials are also stressing that this is the time to diversify exports. For too long, Pakistan’s economy has been overly dependent on low-value textile goods. The deal opens doors for expansion in IT services, pharmaceuticals, value-added agriculture, and minerals. By reducing dependence on a single sector, Pakistan can ensure that tariff shifts in the future do not destabilize its economy.

The Bigger Picture: Energy and Innovation

An often-overlooked aspect of the deal is U.S. interest in Pakistan’s energy potential, including oil reserves. While the economic value of these reserves remains uncertain, the signal itself matters. It shows Washington’s willingness to explore deeper investment partnerships, ranging from energy security to technological collaboration.

Pakistan’s leaders have been quick to highlight this as evidence of a new phase of cooperation—one where emerging technologies like artificial intelligence and blockchain may also enter bilateral discussions. This positions the deal not just as a tariff relief package but as a possible gateway to modernization.

Conclusion

In calling the deal both “balanced” and “forward-looking,” Pakistan is underscoring its diplomatic win while setting the stage for broader economic reforms. The tariff relief is important, but its true value lies in how effectively Pakistan uses this window to rebuild competitiveness, diversify exports, and attract investment. If harnessed wisely, the 19% tariff deal could mark the beginning of a new, bolder era in Pakistan-U.S. economic ties.

Conclusion

Pakistan’s successful negotiation of a 19% U.S. tariff is more than just a technical trade outcome. It reflects diplomatic agility, a focus on economic survival, and an attempt to position the country as a forward-looking partner in a shifting global trade landscape.

Yes, challenges remain, and risks abound. But for now, Pakistan has reason to celebrate. It has secured breathing space for its struggling textile sector, gained a competitive edge over regional rivals, and opened the door to broader cooperation in energy and technology.

The real test lies ahead: Can Pakistan translate this opportunity into sustained growth, diversified exports, and a modernized economy? If so, the 19% tariff may one day be remembered not just as a number—but as the turning point in Pakistan’s trade story.