Trade deal with US

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Editorial August 01, 2025 1 min read

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Pakistan and the United States are in a first-of-its-kind trade deal that seems to be carved out on a profitable index for both the countries. Though no statistics are available officially as to what are the hallmarks of concessions and volume in terms of tariffs, the euphoria on both sides makes it a win-win proposition. The assured thing, however, is that the deal has been struck on lower tariffs for the developing country, and it is a positive development at a time when many of the states, including China, India and Canada, are struggling to come to terms with the Trump administration regarding reciprocal tariffs.

The deal, apparently signed after hectic discussions that evolved political and strategic issues as well, will go on to bolster the confidence for the private sector too. It is widely hoped that it will pave the way for expanding market access, attracting investment and tapping sectors that were in oblivion to this day, such as oil, minerals and crypto-currency. Presently, the bilateral trade volume sits at $7.3 billion, and it is hoped that it should cross the benchmark of $10 billion with the new wrangling instantly.

A surprising aspect of the deal is the mention of oil exploration as an avenue in bilateralism, and the fact that President Trump himself elicited interest in it is worth the salt, and so is the case with the minerals gold-pot that US investors are interested in. Apart from offshore drilling in the Exclusive Economic Zone (EEZ), Pakistan has good prospects for oil and gas in Bannu, North Waziristan and Balochistan's Marri tribal areas.

The deal, nonetheless, has come with some preconditions. Reports say Pakistan has made a major concession to the US by exempting 5% tax imposed on foreign tech firms and online platforms on supply of digitally-ordered goods and services. That means Pakistan will suffer a loss of billions of rupees, as the new tax was announced in the recently passed federal budget. It is, however, not clear how the IMF will react to it as it has been irked on some of the waivers that were doled out to domestic sectors.

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