New agreement slashes tariffs and opens doors for U.S. investment in Pakistan’s infrastructure and oil sector, with Trump hinting at future energy ties with India.
On July 31, Pakistan and the United States signed a landmark trade deal aimed at reducing reciprocal tariffs, boosting bilateral commerce. The agreement, announced by Islamabad, marks a shift from earlier punitive 29% tariffs imposed in April. President Donald Trump claimed credit for brokering peace between India and Pakistan—despite New Delhi’s denial—and touted the new deal as a gateway to regional energy cooperation.
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The newly signed pact will significantly lower tariffs on Pakistani exports to the U.S., particularly in textiles, agriculture, and light manufacturing—sectors vital to Pakistan’s economy. According to a government statement cited by Reuters, the move is expected to spur increased American investment in infrastructure, energy, and development projects across Pakistan.
Trump took to Truth Social to celebrate the deal, stating: “We have just concluded a Deal with the Country of Pakistan, whereby Pakistan and the United States will work together on developing their massive Oil Reserves. We are in the process of choosing the Oil Company that will lead this Partnership. Who knows, maybe they’ll be selling Oil to India some day!”
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The claim about brokering a ceasefire between India and Pakistan in May has been disputed by Indian officials, who maintain that the truce was facilitated through diplomatic channels, not U.S. mediation. Nevertheless, the trade agreement signals improved U.S.-Pakistan relations after years of strained ties following the withdrawal from Afghanistan.
Economists suggest the deal could boost Pakistan’s export revenues by up to 15% over the next two years and improve foreign direct investment inflows. Analysts also note that the focus on oil reserves may accelerate exploration efforts, potentially transforming Pakistan into a regional energy player.
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Tensions between India and Pakistan escalated in early May amid border clashes, prompting global concern. The U.S. had previously withdrawn trade benefits from Pakistan in 2021 due to security concerns. The April 2024 imposition of 29% tariffs further strained economic relations. This latest agreement follows months of behind-the-scenes negotiations, including high-level meetings between U.S. Trade Representative Jamieson Greer and Pakistani officials.
With the deal now in effect, both nations are expected to finalize implementation details within the next 60 days. Experts anticipate that the partnership could expand into joint ventures in clean energy and digital infrastructure. As Pakistan seeks economic revival, the U.S. remains a key ally in unlocking growth—but questions linger over whether Trump’s diplomatic claims will impact long-term strategic credibility.
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