In recent weeks, the US announced a sweeping reduction in tariffs on Pakistani exports, alongside a landmark agreement to begin crude oil imports into Pakistan. A crude oil shipment from Houston is expected to arrive at Karachi port in October, marking the first direct energy transaction of its kind between the two countries.
For a country often on the defensive in global economic conversations, Pakistan has stepped into a position of advantage. But the weight of this breakthrough will not be felt in press conferences. It will be tested in execution.
The regional contrast is growing sharper. India, long considered the standard-bearer for South Asian economic diplomacy, is now managing frayed trade relations with Washington. The new measures are set to take effect soon, creating a narrow window for Pakistan to absorb short-term demand shifts in the US market. Bangladesh, another major export-driven economy, continues to face regulatory scrutiny around labour practices. Against this backdrop, Pakistan has emerged as the only major South Asian economy moving closer to US trade alignment, with lower tariffs, a fresh energy partnership and increased attention from American investors. This is a rare moment of strategic positioning.
The most immediate economic beneficiaries are textile and apparel exporters, who form the backbone of Pakistan’s trade with the US. They now enjoy a pricing edge in a market where even small margins matter. But the implications go beyond garments. The oil import agreement introduces a new dimension to Pakistan’s energy landscape. Sourcing directly from the US reduces reliance on a narrow group of suppliers and broadens Pakistan’s room to manoeuvre in future tenders. It sends a signal that energy procurement can reflect principles of transparency, competition and stability. If these imports continue at scale, they could justify long-overdue investments in refining infrastructure, much of which remains misaligned with lighter crude blends.
The broader deal includes US support in developing Pakistan’s domestic reserves, which could offer long-term value. But this will depend on how effectively the country handles its legacy challenges. Procedural inefficiencies and weak institutional coordination often constrain the natural resource sector. Exploration efforts will only succeed if Pakistan streamlines approvals, ensures legal clarity and builds early local engagement, particularly in Baluchistan and Sindh. Consent and confidence must be established before contracts are signed, not negotiated afterwards. The governance model for resource development needs to move faster than the cycles that have historically delayed progress.
The promise of this moment depends on how Pakistan chooses to carry it forward. The country has benefited from external support before. From the GSP Plus arrangement with the EU to the Kerry-Lugar assistance package and earlier trade preferences from Washington, the opportunity has been there. But too often, fragmented execution and mismatched expectations have prevented these gains from being fully realised. This time, delivery needs to be coordinated, deliberate and responsive.
Exporters need practical assistance in meeting compliance standards required by US buyers. Integrating smaller firms, especially those based outside major urban centres, will be essential to broadening participation. In the energy sector, facilities must be equipped to process and distribute incoming crude efficiently. The downstream impact should extend well beyond the country’s corporate hubs, feeding into regional economies and broader employment growth.
Fiscal planning will play a central role. Any relief on the import bill or gains in foreign reserves from expanded exports must be reinvested with discipline. This includes strengthening trade infrastructure, expanding customs digitisation and improving logistics capacity. These systems determine whether Pakistan can sustain competitiveness over time.
The agreement also carries a reputational benefit. It is the first significant US-Pakistan economic arrangement in years not born out of crisis. It was not driven by emergency lending or economic distress. It resulted from alignment, negotiation and mutual interest. This gives Pakistan a stronger story to tell and a responsibility to follow through.
The coming weeks are especially critical. As the new US tariffs on Indian goods near implementation, American buyers will begin reassessing supply options. Pakistan can position itself as a reliable alternative, but only if it moves quickly to engage importers, streamline domestic processes and present a clear path to fulfillment. This window will not remain open long.
The global environment is moving. Trade flows are shifting. Energy partners are recalibrating. Supply chains are being redefined. Pakistan now has a chance to step forward as a credible participant. This agreement is not the culmination of anything but a beginning. Whether it becomes a milestone or a missed step depends entirely on what happens next.
The writer is a non-resident fellow at the CISS. He posts/tweets @umarwrites
