Pakistan is considering a plan to buy 10% of its crude oil and petroleum imports from the United States, a move driven by concerns that President Donald Trump’s tariff – now paused for three months – could cost the country as much as $1.4 billion.
As part of his America First policy, Trump has decided to levy a 29% reciprocal tariff on Pakistani imports into the United States. Additionally, the U.S. president has imposed a 10% baseline charge on all imports into the country.
Pakistan’s Ministry of Energy is devising the plan that is designed to help bridge the trade deficit between the two nations, which currently stands in Islamabad’s favor by $3 billion.
Trump’s 90-day pause on the enforcement of the tariffs has give space to countries to negotiate with Washington and find ways to address the imbalance, which the U.S. Administration says has hurt American interests over the past several decades.
Pakistan Institute of Development Economics (PIDE), an Islamabad-based think tank, estimates a possible 20-25% decline in Pakistani exports to the United States if the Trump tariffs go ahead.
Consequently, the Pakistani economy may lose between $1.1 billion and $1.4 billion annually.
The additional U.S. tariffs could be particularly bad for Pakistan’s textile sector, which accounts for a major share of exports to the United States.
According to PIDE, Pakistani textile exports represent a significant portion of the $5.3 billion worth of goods sent to the United States in fiscal year 2024.
As such, higher tariffs could make Pakistani products less competitive compared to those from neighboring countries like India and Bangladesh.
Besides, the South Asian country, struggling with economic revival, could also see a loss of over 500,000 jobs.
The U.S. remains Pakistan’s largest trading partner, despite downslide in strategic relations since America’s withdrawal from neighboring Afghanistan in 2021.
Meanwhile, in a sign of renewed interest in the bilateral relationship, U.S. Secretary of State Marco Rubio last week “raised prospects for engagement on critical minerals and expressed interest in expanding commercial opportunities.”
A U.S. delegation also participated in a Pakistan Mineral Forum in Islamabad last week.
Pakistan is considered as holding one of the largest copper reserves in the world, and some experts say a gold and copper mine in strategically located Balochistan province could be used as a leverage in trade talks with the Trump Administration.
“When you think about what (the Trump administration) are trying to achieve with these tariffs, this project actually ticks a lot of boxes,” Tim Cribb, project director of Barrick’s Reko Diq mine, told Financial Times.
“For us, we have lending coming from the US . . . we’re going to spend money in the US . . . it’s copper concentrate, a strategic metal . . it could be more a positive than a negative,” Tim Crib said.
Upon its development, the mine promises to be a $9bn reserve, which will make it one of the world’s largest copper-gold mines.
Currently, 50 per cent of the mine is owned by Toronto- and New York-listed Barrick while the other half is owned by Pakistan’s federally owned entities and the resource-rich but insurgency-hit Balochistan province.
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