June 10, 2025 — Pakistan and the United States have taken a significant step forward in resolving lingering trade tensions as top officials from both governments held a virtual meeting on Monday to advance negotiations on tariff removal and investment enhancement.
The meeting, conducted between Pakistan’s Finance Minister Muhammad Aurangzeb and U.S. Commerce Secretary Howard Lutnick, marked a serious attempt to finalize a trade deal that has been under discussion since former President Donald Trump imposed sweeping tariffs on global imports in 2024.
Backdrop: Trade Tensions Under Trump’s Tariff Spree
In April 2024, Donald Trump reignited a global trade war by imposing up to 29% tariffs on various imports, including those from Pakistan, citing trade imbalances and national security.
Pakistan, which relies heavily on the U.S. as its largest export destination (over $5 billion in annual exports), was hit hard by the decision. These tariffs were reciprocated by Islamabad, but both sides agreed to a temporary freeze on levies until July 2025, buying time for diplomatic and economic negotiations.
What Happened in the Virtual Meeting?
According to a press release from Pakistan’s Ministry of Finance, both sides engaged in constructive dialogue, agreeing to:
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Deepen trade and investment ties through mutual economic cooperation
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Continue technical-level discussions in the coming days
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Formulate a mutually agreed roadmap for finalizing the trade deal
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Remove non-tariff barriers to streamline market access
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Improve bilateral export-import balance
“The discussions focused on meaningful engagement in trade, investment and deepening economic ties… with the understanding that further technical-level detailed discussions will be held,” the official statement read.
Pakistan’s Strategic Position and Economic Motivation
With annual exports to the U.S. exceeding $5 billion and imports around $2.1 billion, Pakistan has a strategic interest in resolving trade imbalances and protecting key sectors such as:
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Textiles and apparel (major export to the U.S.)
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IT and software services
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Agricultural products
Finance Minister Aurangzeb, in a recent interview with Bloomberg, emphasized that Pakistan is ready to import more goods from the U.S., remove non-tariff hurdles, and increase transparency in regulatory practices to avoid long-term tariff damage.
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Diplomatic Backing from PM Shehbaz Sharif
Prime Minister Shehbaz Sharif hailed the development as a sign that Pakistan-U.S. relations are entering a “new era.” With ongoing reforms in economic policy, digitization, and export promotion, Islamabad views improved ties with Washington as crucial to economic recovery post-IMF restructuring.
U.S. Calculus: Countering China, Stabilizing South Asia
The Biden administration, despite Trump’s lasting influence on trade policy, appears more open to pragmatic bilateral deals—especially as Pakistan strengthens ties with Gulf economies, China, and Central Asia. The U.S. has strategic incentives to keep Pakistan engaged:
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Ensure stability in South Asia
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Contain Chinese economic influence
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Tap into Pakistan’s youth-driven tech and service sectors
What’s Next? Timeline and Risks
With the July 2025 tariff freeze expiration approaching, urgency is building to finalize a comprehensive deal. Risks if negotiations stall include:
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Resumption of high tariffs on Pakistani goods
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Loss of U.S. market share to regional competitors (India, Vietnam, Bangladesh)
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Investor uncertainty due to geopolitical and fiscal instability
On the other hand, a successful deal could:
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Unlock new investment flows from the U.S.
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Open up preferential market access for Pakistan
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Strengthen Pakistan’s macroeconomic credibility globally
Conclusion: Momentum Toward Resolution
While the path to a full-fledged trade agreement remains complex, Monday’s virtual meeting indicates strong political will on both sides to move forward. If sustained, this momentum could rewrite the trajectory of Pakistan-U.S. trade relations—a crucial pillar of Islamabad’s economic diplomacy in 2025.
