Pakistan has reached an agreement with the International Monetary Fund (IMF) to reduce the country’s weighted average tariffs to 6 percent over the next five years. This cut is significant, halving the current rate of 10.6 percent. The goal is to open up Pakistan’s economy to more foreign competition, making it the lowest in South Asia.
As a result of this tariff reduction, car prices in Pakistan are expected to decrease. Lower import costs in the auto sector will lead to a reduction in local car prices. The new tariff rates will be implemented from July 2025, with the target of achieving a 6 percent rate by 2030.
The tariff policy is structured under two key frameworks. The National Tariff Policy aims to bring tariffs down to 7.4 percent by 2030. The Auto Industry Development and Export Policy (AIDEP) will see even larger reductions for the automobile sector. In addition, several customs duties will be eliminated, and regulatory duties on goods will drop by 80 percent.
For the auto sector, additional customs and regulatory duties will be removed by 2030. Import tariffs will be capped at 20 percent, and a new 6 percent customs duty slab will be introduced. The policy is expected to be approved by the cabinet by June, with full implementation starting in the 2025-26 budget.