Pakistan races to finalise tariff deal with US as 90-day suspension deadline nears expiry

Pakistan and the United States are preparing to finalise a crucial agreement on reciprocal tariffs by next week, according to a statement released by Pakistan’s Ministry of Finance on Wednesday. The move comes ahead of the expiry of a 90-day suspension of new US tariffs that could hit Pakistani exports with duties of up to 29 per cent.

The agreement follows a virtual meeting between Pakistan’s Finance Minister Muhammad Aurangzeb and US Commerce Secretary Howard Lutnick. According to the finance ministry, both sides agreed on “meaningful engagement” to strengthen bilateral trade and investment, and to build a broader economic partnership.

US targets Pakistan’s $3 billion trade surplus

The negotiations were triggered after the US announced tariffs last month on countries running significant trade surpluses with Washington. Pakistan, which posted a $3 billion trade surplus with the US, now faces a potential 29 per cent tariff on its outbound shipments.

As per APP, the US initially delayed the tariffs by 90 days to give space for diplomatic negotiations. Islamabad responded by dispatching a high-level trade delegation to Washington in May. During the visit, Pakistan proposed a zero-tariff bilateral trade agreement and offered to boost imports of US goods such as cotton and edible oils, which are in domestic short supply.

New framework for strategic economic cooperation

Beyond tariffs, both sides are also discussing a long-term plan to deepen trade and investment ties. According to Pakistan’s finance ministry, the discussions will lead to a “strategic and investment-based partnership,” with technical-level talks expected to wrap up next week.

The talks come at a time when Pakistan is looking to attract greater foreign investment amid economic reforms. Earlier this week, the two countries co-hosted a webinar promoting investment in Pakistan’s mineral sector, including the $7 billion Reko Diq copper-gold project, as reported by Reuters.

US investors and government officials reportedly discussed public-private partnerships and regulatory changes to boost Pakistan’s mining sector.

Trade diplomacy follows regional thaw

The broader context is also shifting. US President Donald Trump, who recently brokered a ceasefire between Pakistan and India, has argued that trade diplomacy has helped avoid a deeper conflict between the two neighbours. Trump has positioned trade as a key instrument of foreign policy during his second term.

For Pakistan, preserving access to the US market is essential. The US remains one of Pakistan’s largest trading partners, particularly for textiles, garments, and leather goods.

With the clock ticking on the 90-day suspension, the stakes are high. A failure to secure a deal could expose Pakistan’s exports to costly US tariffs at a time when the country is already grappling with a depreciating rupee and industrial stagnation.

(With inputs from the agencies)