Pakistan (Commonwealth Union)_ The United States and Pakistan have inked a new trade deal to increase energy cooperation and strengthen market access between the two countries. The agreement was revealed immediately after a round of bilateral meetings in Washington, and it is regarded as a start toward improving relations after years of diplomatic tensions. Accordingly, Prime Minister Shehbaz Sharif welcomed the agreement, calling it a “landmark deal” in a post on X. He praised President Trump’s leadership in reaching the accord and said it reflects the “expanding frontiers” of the two countries’ partnership.
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A crucial component of the deal is to expand Pakistan’s oil resources, with hopes to attract US investment in the energy industry. US President Donald Trump confirmed the agreement in a statement released on his Truth Social platform, stating that the two nations would collaborate to develop Pakistan’s “massive oil reserves” and are now appointing an American company to oversee the deal. “Who knows, maybe they’ll be selling oil to India someday,” Trump tweeted, implying future regional energy dynamics. He also mentioned that other countries have lately approached the US with ideas for tariff relief, indicating a larger global interest in enhancing trade deals with Washington.
Pakistan’s Finance Ministry echoed the announcement, confirming that the agreement includes a reduction in reciprocal tariffs, particularly those affecting Pakistani exports to the US. Although the ministry did not reveal the details, we anticipate that this move will benefit companies that depend on US market access. This development comes after the US imposed a 25% tax and additional penalties on Indian exports earlier this week. Just months ago, Pakistan had been facing a 29% tariff rate on exports to the US, introduced in April. That rate was temporarily suspended for 90 days to allow for negotiations, talks that have now led to this new deal.
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Pakistan’s present oil reserves are low when compared to India’s. According to government estimates, the country had around 238 million barrels of proved reserves in 2024, with production hovering around 68,000 barrels per day. By contrast, India produced about 600,000 barrels per day by the beginning of 2025, and as of 2016, its verified reserves were 4.8 billion barrels. Both nations rely heavily on imports to meet domestic demand. Despite its limited reserves, Pakistan’s stock market reacted positively to the report. The benchmark index in Karachi rose 0.6% on Thursday, led by gains in energy exploration and infrastructure firms.
Finance Minister Muhammad Aurangzeb said in a post-deal video message that the agreement marks the start of broader economic cooperation, not limited to oil. “We are also looking at investment in minerals, IT, and digital infrastructure,” he noted. Trade data illustrates the importance of US-Pakistan commerce. In 2024, Pakistan exported over $5 billion worth of goods to the United States while importing approximately $2.1 billion. The US remains one of Pakistan’s largest trading partners. The reduction in tariffs could give Pakistan a competitive edge over other South Asian exporters still facing duties between 25% and 35%.
The pact also complements Pakistan’s ambition to expand US engagement beyond the federal level, with intentions to form state-level alliances and encourage investment in new areas such as cryptocurrency. Pakistan is now working on rules to regulate and control digital assets, in line with a larger drive in Asian markets and Trump’s backing for the crypto business. While Trump described Pakistan’s oil potential as “massive,” analysts caution that the country’s known reserves would only cover less than two years of current domestic demand without imports. Still, the agreement is being viewed as a symbolic breakthrough in bilateral relations and a potential catalyst for renewed foreign investment.
