WASHINGTON/ ISLAMABAD: US President Donald Trump has announced a fresh wave of steep import duties, targeting dozens of countries — including Pakistan with 19 percent reciprocal tariff, ahead of a Friday trade deal deadline.
Previously the US president had slapped 29 percent tariff on Pakistani goods, which was revised on Wednesday night when the two countries finalised a trade agreement.
The Trump’s move is part of his wider effort to shake up global trade rules. Pakistan now joins a list of 69 nations whose goods will face new US tariffs, ranging from 10 percent to 41 percent, starting next week.
For India the tariffs will be 25 percent, for Sri Lanka, Vietnam, Thailand and Bangladesh 20 percent, while for Afghanistan 15 percent.
Washington had asked Pakistan to do more on certain stringent conditions, but Islamabad showed reluctance to accept, after which, the Trump administration slapped a 19 percent tariff on exports of Pakistani products.
However, the imposition of a 19 percent tariff on Pakistan’s exports would still provide a comparative advantage over India and China but there would be a cut throat competition in case of Bangladesh, Vietnam, Thailand and Sri Lanka.
“The US moved ahead with imposition of 19 percent tariff on Pakistan instead of lower side range of 15 percent mainly because Islamabad did not show its readiness to accept demands from Washington. There are conditions attached to supply chain and some of them are China specific,” top official sources confirmed while talking to The News here on Friday.
Pakistan’s delegation led by Minister for Finance Muhammad Aurangzeb and Commerce Secretary Jawad Paul have not yet returned back from Washington DC, so more details on certain conditions from Washington would be shared with official quarters probably in a couple of days.
Pakistani negotiators, according to the sources, still believe that their tariff could be reduced further; however, in the wake of certain stringent conditions, it seems hard that Washington would be ready for further reduction in the tariffs. On other hand, Pakistan possesses advantaged position compared to India and China but recent posts of Donald Trump on the social media platforms that they might consider slashing down tariff on our regional countries.
The US in its latest Presidential Action titled “Further Modifying the Reciprocal Tariff Rates” stated that certain foreign trading partners identified to this order have agreed to, or are on the verge of concluding, meaningful trade and security agreements with the United States. Goods of those trading partners will remain subject to the additional ad valorem duties provided to this order until such time as those agreements are concluded, and issue subsequent orders memorialising the terms of those agreements.
When contacted to Ministry of Commerce high-ups, they argued that Pakistan is in the 33rd position in terms of trade surplus with the US. Pakistan’s export to the USA is only 17 percent of its total exports in value terms.
In 2024, US exports to Pakistan totaled $2.14 billion, while imports stood at $ 5.47 billion. Pakistan is also a major trading partner of the EU, China and other Middle Eastern and far eastern countries.
“The exports cannot go up standalone as whole government approach requires to boost up exports of the country. It requires reduction in cost of doing business, releases of stuck up refunds, cheaper energy cost and targeted incentives to increase exports,” the sources said and added that without increasing productivity and exportable surplus the dream for increasing export earnings could not be materialised.
Earlier, Trump said that the new tariffs are meant to fix what he sees as unfair trade imbalances and protect US economic and security interests.
Trump released an executive order listing higher import duty rates of 10 percent to 41 percent starting in seven days (August 7) for 69 trading partners as the 12:01 am EDT (09:01 am PST) deadline approached. Some of them had reached tariff-reducing deals, and some had no opportunity to negotiate with his administration.
The order said that goods from all other countries not listed in an annex would be subject to a 10 percent US tariff rate. Trump’s order stated that some trading partners, “despite having engaged in negotiations, have offered terms that, in my judgement, do not sufficiently address imbalances in our trading relationship or have failed to align sufficiently with the United States on economic and national-security matters.” Trump issued a separate order for Canada that raises the rate on Canadian goods subject to fentanyl-related tariffs to 35 percent from 25 percent previously, saying Canada had “failed to cooperate” in curbing fentanyl flows into the US.
The higher tariffs on Canadian goods contrasted sharply with Trump’s decision to grant Mexico a 90-day reprieve from higher tariffs of 30 percent on many goods to provide more time to negotiate a broader trade pact.
A US official told reporters that more trade deals were yet to be announced as Trump’s higher “reciprocal” tariff rates were set to take effect.
“We have some deals,” the official said. “And I don’t want to get ahead of the President of the United States in announcing those deals.”
Regarding the steep tariffs on goods from Canada, the second largest US trading partner after Mexico, the official said that Canadian officials “haven’t shown the same level of constructiveness that we’ve seen from the Mexican side.”
The extension for Mexico avoids a 30 percent tariff on most Mexican non-automotive and non-metal goods compliant with the US-Mexico-Canada Agreement on trade and came after a Thursday morning call between Trump and Mexican President Claudia Sheinbaum. “We avoided the tariff increase announced for tomorrow,” Sheinbaum wrote in an X social media post, adding that the Trump call was “very good.”
Approximately 85 percent of US imports from Mexico comply with the rules of origin outlined in the USMCA, shielding them from 25 percent tariffs related to fentanyl, according to Mexico’s economy ministry.
Trump said the US would continue to levy a 50 percent tariff on Mexican steel, aluminium and copper, and a 25 percent tariff on Mexican autos and on non-USMCA-compliant goods subject to tariffs related to the US fentanyl crisis.
“Additionally, Mexico has agreed to immediately terminate its Non Tariff Trade Barriers, of which there were many,” Trump said in a Truth Social post without providing details.
South Korea agreed on Wednesday to accept a 15 percent tariff on its exports to the US, including autos, down from a threatened 25 percent, as part of a deal that includes a pledge to invest $350 billion in US projects to be chosen by Trump.
But goods from India appeared to be headed for a 25 percent tariff after talks bogged down over access to India’s agriculture sector, drawing a higher-rate threat from Trump that also included an unspecified penalty for India’s purchases of Russian oil.
Although negotiations with India were continuing, New Delhi vowed to protect the country’s labour-intensive farm sector, triggering outrage from the opposition party and a slump in the rupee.
Trump’s rollout of higher import taxes on Friday comes amid more evidence they have begun driving up consumer goods prices.
Commerce Department data released Thursday showed prices for home furnishings and durable household equipment jumped 1.3 percent in June, the biggest gain since March 2022, after increasing 0.6 percent in May. Recreational goods and vehicles prices rose 0.9 percent, the most since February 2024, after being unchanged in May. Prices for clothing and footwear rose 0.4 percent.
Trump hit Brazil on Wednesday with a steep 50 percent tariff as he escalated his fight with Latin America’s largest economy over its prosecution of his friend and former President Jair Bolsonaro, but softened the blow by excluding sectors such as aircraft, energy and orange juice from heavier levies.
The run-up to Trump’s tariff deadline was unfolding as federal appeals court judges sharply questioned Trump’s use of a sweeping emergency powers law to justify his steep tariffs of up to 50 percent on nearly all trading partners.
Trump invoked the 1977 International Emergency Economic Powers Act to declare an emergency over the growing US trade deficit and impose his “reciprocal” tariffs and a separate fentanyl emergency. The Court of International Trade ruled in May that the actions exceeded his executive authority, and questions from judges during oral arguments before the US Appeals Court for the Federal Circuit in Washington indicated further scepticism.
US Treasury Secretary Scott Bessent said earlier that the United States believes it has the makings of a trade deal with China, but it is “not 100 percent done,” and still needs Trump’s approval.
US negotiators “pushed back quite a bit” over two days of trade talks with the Chinese in Stockholm this week, Bessent said in an interview with CNBC.
China is facing an August 12 deadline to reach a durable tariff agreement with Trump’s administration, after Beijing and Washington reached preliminary deals in May and June to end escalating tit-for-tat tariffs and a cut-off of rare earth minerals.
Meanwhile, the Pakistan’s Finance Ministry said in a statement that the new tariff agreement with the US is expected to enhance market access, strengthen trade flows, and boost Pakistani exports in various sectors, thereby contributing to economic growth.
The ministry expressed satisfaction over the successful conclusion of tariff-related discussions with the United States, adding that, as a result of these talks, a 19 percent tariff will be applicable to Pakistani exports entering the US market.
“This decision reflects a balanced and forward-looking approach by the US authorities, keeping Pakistan competitive relative to other South and Southeast Asian countries,” it said.
In particular, this tariff level is expected to support Pakistan’s export potential, especially in key sectors such as textiles, which remain the backbone of the country’s export economy.
“The Ministry of Finance, in close coordination with relevant stakeholders, believes that the current tariff arrangement presents a significant opportunity to expand Pakistan’s footprint in the US market,” the statement said, adding that it was essential for Pakistani exporters and trade bodies to adopt an aggressive and focused marketing strategy to capitalise on this development.
In addition to textiles, there was substantial potential for growth in other sectors, it said, adding the government was committed to facilitating exporters through policy support, market intelligence and trade promotion initiatives.
The ministry expressed the hope to further positive engagements and close cooperation with the United States in the areas of investment, artificial intelligence, cryptocurrency, mines & minerals, energy, and other emerging sectors.
“Pakistan will continue to engage closely with President Trump and the US administration to promote the shared goals of economic development and mutual prosperity,” it added.
The ministry appreciated the constructive engagement of the US authorities and acknowledged the valuable role played by country’s team including Ministry of Commerce, Mission in Washington DC and other public and private sectors stakeholders.
Meanwhile, Prime Minister Shehbaz Sharif expressed satisfaction over the landmark rise of the Pakistan Stock Exchange KSE-100 Index, which surged past the 140,000-point level for the first time in history.
Calling it a “positive reflection of investor confidence,” the prime minister said the bullish trend in the stock market indicates growing trust in the government’s economic policies.
“The upward momentum in the stock exchange is a strong endorsement of our economic direction,” he said in a statement issued by the PM Office.
Shehbaz reaffirmed that facilitating business and investment remains a top priority for his administration.
“We are committed to providing all possible support to businesses and investors to drive sustainable economic growth,” he added.
Highlighting recent institutional improvements, the prime minister credited reforms in the Federal Board of Revenue (FBR) for strengthening the tax system and providing relief to the business community. “Alhamdulillah, Pakistan’s economic trajectory is improving, and we are steadily moving towards progress and development,” he concluded.
Meanwhile, All Pakistan Textile Mills Association (Aptma) Chairman Kamran Arshad, welcoming the trade deal with the US, said that the business community in the country was expecting that tariffs from the US will stay at 15-17 percent, but the tariff deal is done at 19 percent.
However, he stressed the government’s top functionaries to continue to engage with the US trade representative for the further lowering tariff duties on Pakistani products.
He argued that the US has imposed 20 percent on Bangladesh and Vietnam each. The one percent edge does not matter as the input cost — such as the electricity, and gas rates both in Bangladesh and Vietnam are far cheaper than the energy tariff for Pakistan industries. More importantly, the interest rates are very low in both Bangladesh and Vietnam. So the one percent edge in tariff to Pakistan will have no impact on Pakistan exports.
The State Bank of Pakistan is now required to reduce the discount rate to six percent in Pakistan. The smooth electricity to the industrial sector is not available as it is full of jerks and outages and more importantly the gas rates for captive power plants have increased to Rs3,500 per MMBtu, plus Rs791 per MMBtu off-the-grid levy. For that reason, the gas consumption in the exports sector has reduced by 250mmcfd to 100 mmcfd from 350mmcfd.
“Yes, however, the opportunities to hike the exports to the USA market have increased and the marginal increase in exports will be observed.”
As far as India is concerned, the Aptma chief said that the US has imposed the 25 percent tariff on Indian products and this will provide a space in the US market to Pakistani products and entrepreneurs will be in a position to get the advantage to grab a reasonable portion of Indian share in the US market.
However, Pakistan will not be able to inflict a dent in the market shares of Bangladesh and Vietnam because of the high energy tariffs, huge taxation and high interest rates.
He said that the negotiations between the USA and India are still going on with pressure tactics by the US president who has banned some Indian companies for importing petroleum products from Iran in the past and warned of 100 percent tariff if India is found involved in trade with Russia. If the US-India deal is done later on, and the US tariff on the Indian products is reduced to a reasonable level from 25 percent, then the situation will be altogether different.
Kamran said that in the US-Pakistan trade, the trade deficit of just $3 billion tilted towards Washington. He said Pakistan has levied almost nominal tariffs on US products. So, Pakistan authorities should have managed the US tariff at 15-17 percent instead of 19 percent.
He reckoned that there was a huge trade deficit towards the US when it comes to the trade with Japan, but the US imposed just 15 percent tariff on Japan. He said Pakistan will import a huge quantity of cotton and it may be one of the biggest importer of soybean from the US apart from import of crude oil and machinery.
Meanwhile, Pakistan Textile Council Chairman Fawad Anwar, while talking on ‘Naya Pakistan’ programme at Geo TV, said that the textile industry was expecting tariff from US in the range of 15 percent but they imposed 19 percent tariff, which was lower than India but stood in the same range with other competitive economies like Bangladesh, Vietnam, Sri Lanka and others.
He said that the cost of doing business went up in the last two years as the prices of energy and hike in taxation rates had gone up manifold and it would affect Pakistan’s exports. This tariff, he said, would have to be absorbed by the manufacturers, retailers or consumers. It will help to decrease uncertainties and result into demand compression, he added.
Musadiq Zulkurnain from Interloop said that that full details of trade agreement was not yet fully known. He said that the effect was neutral. Initially, he said that efforts were made to avert worst off effects in shape of imposition of higher tariff compared to competitive economies as happened with India. It looks winning as higher tariff was not imposed on Pakistan, he said and added that on this account it could be termed as relief. There were expectations that Pakistan would get advantage of five percent but in case of India there was an advantage of 6 percent however it might prove temporary as they were still trying to slash it down.
