ISLAMABAD: The government has reportedly established contact with Washington through diplomatic channels to seek a win-win trade deal, while also engaging local industry stakeholders on the implications of the recent reciprocal tariff announcement by the US President, well-informed sources told Business Recorder.
“We are in contact with the Trump Administration through the Pakistan Embassy in Washington regarding the issue of increased tariffs,” the sources said. “Efforts are underway to initiate formal talks at the government level. An official delegation, led by the Commerce Secretary, will depart for Washington once meetings are scheduled.”
Like many other capitals, Islamabad welcomed US President Donald Trump’s decision to pause the implementation of increased tariffs for three months—a window aimed at encouraging renegotiation of trade deals.
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In a policy note issued Sunday titled “Impact of Unilateral Tariff Increase by United States on Pakistani Exports,” the Pakistan Institute of Development Economics (PIDE) stated that the proposed 29% reciprocal tariff could be added to the existing 8.6% Most Favoured Nation (MFN) tariff, potentially raising the total duty to 37.6%. Such an increase could result in a 20–25% decline in exports to the United States, translating into an annual loss of $1.1–$1.4 billion. The textile sector—already burdened with high tariffs—would be particularly affected.
However, the Ministry of Commerce disputes the inclusion of the 8.6% MFN tariff in the reciprocal tariff calculation, arguing that MFN tariffs are regulated under the World Trade Organization (WTO) framework, of which the U.S. is also a member.
The United States remains Pakistan’s largest single-country trading partner. Bilateral trade between the two countries stood at $5.540 billion during the first nine months (July–March) of FY 2024–25, up 15% from $4.283 billion during the same period in FY 2023–24.
Pakistan’s exports to the US grew by 12% to $4.345 billion during the period, compared to $3.889 billion in the corresponding months of the previous fiscal year. Imports from the U.S. also saw significant growth—rising 28% to $1.195 billion from $933.6 million.
The Pakistan-U.S. trade surplus increased 7%, reaching $3.150 billion during the first nine months of the current fiscal year, up from $2.956 billion in the same period of FY 2023–24.
Sources added that the issue of reciprocal tariffs was also raised with a visiting U.S. Congressional delegation. The Ministry of Foreign Affairs is maintaining diplomatic engagement with Washington on the matter.
According to sources, the Ministry of Commerce has submitted proposals to Prime Minister Shehbaz Sharif, who has returned them with suggestions for further refinement. Finance Minister Muhammad Aurangzeb is also holding consultations on the issue.
“We have formulated our strategy with regard to the US, but we cannot disclose it at this stage,” said Commerce Secretary Jawad Paul, speaking to Business Recorder. He noted, however, that he had not yet reviewed the policy note released by PIDE.
The Commerce Ministry is also holding consultations with industry sectors likely to be affected by the proposed U.S. tariff regime. According to internal analysis, Pakistan is expected to face less adverse impact than other countries. For instance, Turkey has a 10% tariff rate but primarily exports denim to the U.S., while Pakistan’s denim exports are relatively limited.
Copyright Business Recorder, 2025
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