Karachi: Finance Minister Aurangzeb's Optimism on US Tariffs Reversal
U.S. tariffs reversal brings optimism for Aurangzeb
Chatting at a press conference in the Federation house, Federal Finance Minister Muhammad Aurangzeb expressed enthusiasm about potentially reversing the 29% tariff imposed by the United States. He stated that Pakistan would soon dispatch a high-powered delegation to the US to confer regarding tariffs and trade issues.
Aurangzeb cast the current predicament with the US as a trade imbalance issue rather than a tariff obstacle, emphasizing that Pakistan exports goods worth $5 billion while barely importing $2.1 billion. This delegation, he stated, is intended to work towards rectifying this imbalance by incorporating soybean, cotton, and other sectors into the trade equation, aiming to create a better balance.
Pakistan Pursuing Strategic Import Expansion to Reverse Trade Deficit
Pakistan plans to juice up U.S. agricultural imports, mainly focusing on cotton and soybean, to chip away at the $3.2 billion trade deficit[3][5]. This initiative aims to balance the current export-import ratio, where Pakistan exports $5.1-$5.2 billion to the U.S. against $2.1 billion in imports[1][4].
Negotiating Trade Terms with the US
The high-level Pakistani delegation is all set to head to the US to hammer out tariff accommodations and trade-balancing discussions[5][2]. Talks will focus not only on preserving the competitiveness of Pakistan's textile sector (accounting for 55% of U.S.-bound exports)[4][2], but also on exploring compromises on import rules.
Bolstering Economic Growth through Sectoral Diversification
Although textiles might struggle with tariffs, Pakistan is taking advantage of the growth in its IT sector, which surpassed $1 billion in U.S. exports in 2024[4][2], to lessen dependence on conventional industries.
Building Economic Partnerships with China
Simultaneously, Pakistan aims to expand its Chinese currency swap line by 10 billion yuan ($1.4 billion) to strengthen forex reserves, though this initiative is separate from the U.S. trade strategy[3]. Additionally, Pakistan is contemplating importing U.S. crude oil to further rebalance trade[5].
Given the U.S. trade deficit with Pakistan's ballooning 5.2% to $3 billion in 2024[2][4], Islamabad is taking immediate action to control damage as well as strategize for long-term adjustments.
- Aurangzeb expressed optimism about a potential reversal of the 29% tariff imposed by the United States, planning to dispatch a high-powered delegation to discuss tariffs and trade issues.
- Pakistan aims to increase U.S. agricultural imports, particularly focusing on cotton and soybean, to help reduce a $3.2 billion trade deficit.
- The Pakistani delegation will discuss tariff accommodations and negotiations for trade balance, focusing on the competitiveness of its textile sector and possible compromises on import rules.
- Pakistan is focusing on sectoral diversification to bolster economic growth, with the IT sector surpassing $1 billion in U.S. exports in 2024.
- To further strengthen forex reserves, Pakistan plans to expand its Chinese currency swap line by 10 billion yuan ($1.4 billion), while also considering importing U.S. crude oil to rebalance trade.
- With the U.S. trade deficit with Pakistan reaching $3 billion in 2024, Islamabad is taking immediate action to control damage and strategize for long-term adjustments.
- The Finance Minister discussed the current situation with the U.S. as a trade imbalance issue, stating that Pakistan exports goods worth $5 billion while barely importing $2.1 billion.
