Last week’s interim trade agreement between the United States and India represents a major shift in global trade dynamics, with broad implications for markets and geopolitics. Under the February 6, 2026, joint statement, the US agreed to reduce tariffs on Indian goods from 25% to 18%, while India committed to lowering tariffs and non-tariff barriers on US industrial and agricultural products. India also pledged to purchase $500 billion of US goods over the next five years and agreed to halt imports of Russian oil, signalling significant market liberalisation and alignment with US strategic priorities.
The deal includes expanded defence cooperation over a decade and collaboration on export controls and non-market policies, indirectly targeting China. Prime Minister Narendra Modi praised President Donald Trump for his leadership, while Trade Minister Piyush Goyal highlighted protections for sensitive agricultural and dairy products. Critics, however, described the agreement as a sell-out, noting its impact on domestic manufacturing initiatives like ‘Make in India’ and India’s strategic autonomy.
For Pakistan, the US-India trade deal has significant consequences. The US is Pakistan’s largest export market, particularly for textiles and apparel, and any changes in tariffs or market access could affect Pakistan’s trade surplus and export performance. Despite this strategic importance, Pakistan has historically relied on limited tariff preferences rather than comprehensive trade agreements, leaving it increasingly marginalised in global commerce.
The agreement highlights the need for Pakistan to rethink its trade policy and engage in substantive negotiations with major partners, moving beyond symbolic arrangements toward long-term, forward-looking agreements. Deep tariff reforms now underway create a more conducive environment for such engagement, but political will will be the critical factor in translating opportunity into tangible trade gains.
The analysis comes from a former Pakistani diplomat and member of the Steering Committee for the National Tariff Policy 2025–30, who has served as Pakistan’s ambassador to the WTO and FAO’s UN representative.
