In a striking shift in trade policy, US President Donald Trump on Wednesday announced two major decisions within hours. First, a 25% tariff and additional penalties on Indian imports. Then, a new trade agreement with Pakistan to jointly develop its oil reserves.
The tariff on India, effective from 1 August, stems from what Trump called an unfair trade imbalance and India’s ongoing oil purchases from Russia.
“BRICS, which is basically a group of countries that are anti the United States and India is a member of that if you can believe it… It is an attack on the dollar and we are not going to let anybody attack the dollar. So it’s partially BRICS and it’s partially trade,” Trump told reporters, explaining the motivation behind the penalties.
Energy partnership with Islamabad
Hours later, Trump took to his social media platform Truth Social to unveil a US-Pakistan oil agreement.
“We have just concluded a Deal with the Country of Pakistan, whereby Pakistan and the United States will work together on developing their massive Oil Reserves. We are in the process of choosing the Oil Company that will lead this Partnership. Who knows, maybe they’ll be selling Oil to India some day!” he wrote.
The statement marks a rare moment of trade optimism between Washington and Islamabad, whose relations have often been shaped by regional tensions and security interests.
Trump didn’t name the oil companies being considered or provide details on timelines. The Pakistani embassy in Washington did not immediately comment.
Trade talks already in motion
This deal isn’t entirely out of the blue. Last week, Pakistan’s Foreign Minister Ishaq Dar said a US-Pakistan trade agreement was “very close” following his meeting with US Secretary of State Marco Rubio.
The two officials discussed expanding cooperation in minerals and mining, according to statements from both governments. Other senior Pakistani officials have also held meetings in the US in recent weeks.
The US sees Pakistan as a major non-NATO ally, and the new energy push appears to align with Washington’s larger strategic interests in Asia, particularly to counter Chinese influence.
Busy day at the White House
Trump also gave a broader update on his trade agenda, suggesting more tariff changes are on the horizon.
“We are very busy in the White House today working on Trade Deals. I have spoken to the Leaders of many Countries, all of whom want to make the United States ‘extremely happy’. I will be meeting with the South Korean Trade Delegation this afternoon. South Korea is right now at a 25% Tariff, but they have an offer to buy down those Tariffs. I will be interested in hearing what that offer is,” he posted.
He added, “Likewise, other Countries are making offers for a Tariff reduction. All of this will help reduce our Trade Deficit in a very major way. A full report will be released at the appropriate time. Thank you for your attention to this matter. MAKE AMERICA GREAT AGAIN!”
Trade deficit figures and regional strategy
In 2024, the US goods trade deficit with Pakistan reached $3 billion, up 5.2% from 2023, according to data from the US Trade Representative’s office. Total trade between the two nations stood at $7.3 billion, a slight increase from the previous year.
The Trump administration has consistently pushed for recalibrated trade agreements. Many countries have been hit with tariff threats under his tenure, often used as leverage during negotiations.
India-Pakistan ceasefire in the mix
The announcement also follows months of rising tension between India and Pakistan. A deadly militant attack on 22 April in Indian-administered Kashmir led to retaliatory strikes by India on 7 May. Hostilities continued until a ceasefire was declared on 10 May.
Trump has repeatedly claimed that his intervention played a role in calming tensions.
Pakistan’s foreign ministry recently said it “appreciated the pivotal role” played by Trump and Rubio “in de-escalating tensions between Pakistan and India by facilitating a ceasefire.”
India, however, maintains it deals with Pakistan directly, without any third-party involvement.
Talks with India ongoing
Despite the tariff announcement, Trump confirmed that negotiations with India are still happening.
“Well, we are negotiating right now and it’s also BRICS,” he said, referring again to the bloc of emerging economies that includes India, China, and Russia.
Trump’s criticism of India’s participation in BRICS underlines growing friction between Washington and New Delhi on strategic and economic fronts.
For now, India faces steeper import costs. Pakistan stands to gain from renewed US trade interest. And American companies may soon be drilling for oil on Pakistani soil.
(With inputs from ANI, Reuters)
