Finance Minister Muhammad Aurangzeb has arrived in Washington days before a temporary 10 per cent US surcharge on Pakistani exports, imposed under Section 122 of the Trade Act, expires on July 24. A second threat is taking shape under Section 301: the US Trade Representative has proposed another 10 per cent duty after finding that Pakistan has a legal prohibition on forced-labour imports but does not enforce it effectively. His meetings with the USTR, Exim Bank, Development Finance Corporation and IMF must therefore produce more than sympathetic hearings.
Pakistan secured a reduction in the Trump administration’s proposed tariff from 29 per cent to 19 per cent after negotiations last year. The legal foundation then collapsed in February, when the US Supreme Court ruled that the International Emergency Economic Powers Act did not authorise presidential tariffs. The Trump administration promptly shifted to other statutes. The lesson for Islamabad is plain. A temporary concession tied to one executive instrument can disappear with a court judgment or a change in American trade strategy. Pakistan needs terms that are commercially useful and legally durable.
There is room to bargain. Pakistan’s trade with the United States reached $8.7 billion in 2025, with our exports rising to $5.4 billion and imports from the US increasing to $3.3 billion. Any new arrangement should be wary of burdening Pakistani exporters with another layer of duties.
The consequences would be felt most sharply in textiles and apparel, where orders translate directly into factory shifts, wages and foreign-exchange earnings. Islamabad should seek access to the reduced-tariff textile mechanism proposed by the USTR, while treating the forced-labour case as a compliance test rather than a public-relations dispute. Traceable supply chains, credible import controls and visible enforcement will carry more weight than indignant statements.
Mr Aurangzeb can present a stronger macroeconomic picture than Pakistan could offer three years ago. The IMF’s May review unlocked about $1.1 billion under the Extended Fund Facility and $220 million under the climate facility, taking total disbursements under both arrangements to roughly $4.8bn. State Bank reserves stood at $17.2 billion on July 10. These buffers have bought time, but sadly, they have not solved the country’s dependence on a narrow export base and recurring external financing.
Talks in Washington should, hence, be tied to named projects in energy, minerals, logistics, technology and export manufacturing, with financing structures and delivery dates. A deal that merely expands American sales in Pakistan would miss the larger purpose. Washington can keep an important market open. Islamabad must use that access to build the productive capacity that makes future tariff threats less frightening. *