While the US has historically supported Pakistan whether during the 1971 war or through foreign aid, the recent approach seems to be shifting. President Trump’s earlier tariff hikes have now given way to a significant reduction for Pakistan, making its exports more competitive. This relaxation, however, comes in exchange for greater American access to Pakistan’s oil reserves, presenting the USA with an attractive alternative energy source. In the past week, the United States and Pakistan have seen a notable change in their relationship, particularly in trade and energy cooperation. The new agreement could reshape both countries’ economic and political ties in the coming years.
US-Pakistan Trade Deal
On July 31, 2025, a trade deal was signed between America and Pakistan. This agreement is historic because it not only addresses tariffs but also builds a partnership for energy exploration. America agreed to work closely with Pakistan to help develop its local oil reserves. This is a space where Pakistan had not previously worked with the United States. Leaders from both countries called the deal a major step forward: for America, it’s about long-term partnership; for Pakistan, it’s a new chapter in helping boost its economic future.
Tariff Cuts: What’s New
There was much talk about whether the US would make trade more expensive for Pakistan by raising tariffs. However, the opposite happened. Before the new agreement, Pakistani products faced a tariff of 29% when entering America. After the deal, United States agreed to lower this rate to 19%, beginning in August 2025. This makes it much less costly for Pakistan to sell goods, like textiles, to American customers. The reduction in tariffs came right after the deal not as a delayed change or as extra pressure.
US-Pakistan Energy Partnership Grows
A big part of this new partnership is energy. Pakistan will soon receive its first shipment of the United States crude oil. This is a major shift, as Pakistan usually depends on countries in the Gulf for oil imports. The collaboration promises more investment and new technology for Pakistan’s energy sector. It could help the country become less dependent on any one region for its fuel needs and offer better energy security in the future.
Implications for Both Sides
For Pakistan:
The lowered tariff gives Pakistan a stronger chance to compete in the American market, especially with its main exports like textiles. This could help Pakistan earn more dollars and reduce the gap between what it imports and exports. The joint work on energy is also likely to bring new technology and investments, making Pakistan less vulnerable to sudden changes in oil prices or supply disruptions from the Gulf. Politically, Pakistan can now show that it is connecting with both the United States and other partners, such as China, to keep its options open.
For the US:
This deal gives America access to Pakistan’s energy sector, opening doors for American firms and boosting regional influence. It also helps Pakistan export more goods, offering the US a flexible approach in Asia amid tensions with countries like India. Strategically, it aims to reduce Pakistan’s reliance on China for oil.
A Future to Watch
This new trade and energy deal marks a turning point in how America and Pakistan work together. Instead of adding pressure with higher tariffs, America is offering incentives. The changes will not just affect trade numbers but will shape alliances and strategies throughout South Asia in the coming years.
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