U.S.-Pakistan Trade Pact Lowers Tariffs, Targets Oil Development

The United States and Pakistan reached a new trade agreement that cuts tariffs on Pakistani goods and opens the door for American investment in the country’s oil, minerals, and tech sectors.

Officials from both governments confirmed these steps on July 31, 2025. Until now, high US tariffs—up to 29%—threatened Pakistan’s key exports, mostly textiles and farm goods.

After talks in Washington, the US agreed to lower these tariffs and suspend the extra duties, helping Pakistani companies sell more into the American market.

In 2024, Pakistan exported $5.1 billion worth of goods to the US and bought $2.1 billion in return. These changes could make a clear difference to Pakistan’s struggling economy and workforce.

A big part of this deal focuses on Pakistan’s oil reserves. American investors will help try to find and extract oil within Pakistan. But the numbers are modest—Pakistan has about 234 to 353 million barrels of proven reserves, according to government data.

That’s far less than the Middle East giants, and it barely covers a year or two of Pakistan’s own needs. Current output—about 64,000 barrels per day—meets less than a fifth of what Pakistan uses.

Past drilling efforts, often with foreign help, brought few results, partly because geology is challenging and security threats remain. Beyond oil, the agreement encourages American investment in areas like digital tech, mining, and infrastructure.

For Pakistan, attracting foreign money and expertise means a chance to modernize and reduce economic shocks. For the US, this deal is also about keeping a hand in a key part of Asia, where rival powers like China have bigger stakes.

This agreement did not happen by chance. Earlier in 2025, the US imposed heavy tariffs, putting pressure on Pakistan’s currency and job market. After months of talks, both sides found a compromise.

They didn’t share every detail about the new tariff rates, but both governments say the deal offers real relief. Underneath the headlines, the real story is cautious optimism.

Pakistan gets a breather and a shot at new investment, but the size of the oil prize may disappoint. Washington secures partnerships without heavy long-term promises.

Both countries need this: Pakistan for stability and jobs, and the US for influence and trade. The world should watch not just the promises, but what actually happens next.