Trump lowers Pakistan's import tariffs from 29% to 19%
The United States and Pakistan have entered into a strategic trade agreement, aiming to jointly develop Pakistan's oil resources, initiate US crude oil shipments, and reduce tariffs to facilitate Pakistani exports to the US.
The agreement, announced by former President Trump on July 31, 2025, marks a significant step towards cooperation to explore Pakistan's oil potential and strengthen trade ties. Pakistan's largest refiner, Cnergyico, plans to import 1 million barrels of US crude oil from global commodity trader Vitol starting in October 2025, marking the country’s first import of American crude oil under this deal, intended initially as a test shipment.
The deal comes after US threats of imposing tariffs (up to 29-25%) on Pakistani imports, prompting negotiations since April 2025. The oil partnership is also seen as a way to boost Pakistan’s energy security, which currently depends heavily on Middle Eastern oil imports.
In addition to the oil collaboration, the trade agreement includes a reduction of reciprocal tariffs, especially lowering US tariffs on Pakistani imports. However, specific tariff rates and details have not been disclosed publicly. The new tariffs on over 70 nations, including Pakistan, will take effect in one week on August 7. Notably, the tariff reduction applies specifically to imports from Pakistan, with the "universal" tariff for goods coming into the US remaining at 10%, but this rate will apply only to countries with which the US has a trade surplus.
Trump did not specify the oil company that will lead the partnership beyond Vitol, nor did he provide any timelines for the partnership. The tariff reduction comes after a deal between the US and Pakistan to jointly develop Pakistan's oil reserves, with both countries cooperating to tap unexplored oil reserves. The tariff reduction is one of many changes in Trump's new tariff regime, which will also have a range, with separate sector-specific duties being implemented, specifically on copper.
Trump also suggested that Pakistan might eventually export oil to India, positioning the agreement as part of his "Liberation Day" tariff expansion plan. However, the article does not provide specifics about the other countries affected by the tariff changes beyond Pakistan.
The strategic trade agreement between the United States and Pakistan, intended to foster cooperation in exploring Pakistan's oil potential, also involves a reduction of reciprocal tariffs, particularly lowering US tariffs on Pakistani imports, which is expected to bolster both healthier finance for Pakistani businesses and improved business relations with the US.
Moreover, the first import of American crude oil under this deal, planned by Pakistan's largest refiner, Cnergyico, from global commodity trader Vitol, signals the potential for Pakistan's business sector to increase its energy security by diversifying its oil sources.
