WASHINGTON: Pakistan and several other South Asian countries are closely observing the expected US-India trade agreement, which is reportedly in its final phase. Officials in these countries believe the outcome of the deal could significantly influence Washington’s broader economic engagement with the region.
Negotiators from both countries have indicated that the agreement is likely to be finalised by the end of November. Once completed, it is expected to support the two sides’ goal of expanding bilateral trade to $500 billion by 2030.
According to diplomatic sources, regional governments are hopeful that the agreement will encourage Washington to broaden its trade footprint across South Asia. They say countries in the region, including Pakistan, are seeking balanced treatment in future US trade initiatives.
These regional expectations are also believed to be one of the reasons behind the delay in issuing a joint US-Pakistan trade statement. Discussions between Islamabad and the US Trade Representative’s office are continuing as both sides attempt to resolve outstanding points.
Pakistani officials are particularly interested in understanding how they can benefit from tariff arrangements under evolving trade rules—especially concessions tied to goods manufactured using raw materials sourced from the United States, such as textiles made from American cotton.
Sources say Islamabad is now adopting a more measured approach. Pakistan is no longer pushing for an immediate announcement of the joint trade statement and is instead waiting to assess the full implications of the US-India deal once it is concluded.
During the finance minister’s visit to Washington in October for the IMF–World Bank annual meetings, officials had suggested that the statement would be released “within weeks, if not days.” However, that timeline has shifted as Pakistan studies the broader regional impact.
The bilateral trade framework between Pakistan and the United States—agreed in principle in July 2025—came into effect on August 7. It includes reciprocal tariff reductions that favour major Pakistani exports such as textiles, leather goods, surgical instruments, and agricultural products. In return, Pakistan withdrew its digital services tax.
Earlier, on August 1, Pakistan announced that the United States had reduced tariffs on Pakistani exports to 19 percent, down from the 29 percent imposed earlier in the year. Pakistani officials described the revised rate as a balanced step aimed at enhancing the country’s competitiveness in the US market.
India, meanwhile, faced steeper duties. Washington initially imposed a 26 percent reciprocal tariff on Indian goods in April, which was later raised to 50 percent through an executive order issued in early August. The increase, effective August 27, was linked to India’s continued purchase of Russian oil.
Economic analysts in Washington have cautioned that the 2025 reciprocal tariff structure could slow both US and global economic growth while contributing to inflation in the affected countries. They warn that states heavily integrated into global supply chains may be hit hardest, as tariffs are applied to the total export value, including imported components.
Another think-tank has noted that the term “reciprocal” can be misleading in this context. Instead of matching partner countries’ tariffs, the United States is calculating its rates using a formula based on its trade deficit with each country—resulting in significantly higher duties, in some cases up to 50 percent.
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