New Delhi: Hours after declaring the imposition of a 25 percent tariff on India, US President Donald Trump announced a deal with Pakistan to develop Islamabad’s oil reserves that could potentially be led by an American petroleum company.
“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!” Trump said in a post on his social media platform, Truth Social.
“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!”
The post comes hours after Trump took aim at India, promising to impose 25 percent in tariffs from 1 August along with an additional penalty due to New Delhi’s continued purchase of Russian energy products, highlighting his irritation with the ongoing negotiations for a mini-deal between the two countries.
The US administration in recent weeks have been in touch with Islamabad at various levels, with Trump hosting Pakistani Field Marshal Asim Munir for a lunch meeting last month at the White House.
US Secretary of State Marco Rubio met with his Pakistani counterpart Ishaq Dar last week in Washington D.C. The two officials discussed deepening the relationship between Washington D.C. and Islamabad with a focus on critical minerals and the mining sectors. Rubio “appreciated” Pakistan’s role in “mediating” conversations between the US and Iran, as well as Islamabad’s “commitment to preserving regional stability,” according to the American readout of the meeting.
This was the first meeting between Rubio and Dar following the 87-hour conflict between India and Pakistan in May. The two leaders had a follow up phone call earlier this week where the issue of tariffs and other bilateral matters were discussed.
Trump did not name the oil company to lead the exploration and development of Pakistan’s oil reserves. The total trade in goods between the two countries stood at roughly $7.3 billion in 2024, with Islamabad exporting $5.1 billion worth of goods in the aforementioned year, as per the US Trade Representative (USTR).
The renewed optimism in ties comes after Islamabad has consistently thanked the role Washington D.C. essayed to ensure the cessation of firing with India in May. While India has rejected the role of the US in the bilateral understanding, Pakistan has, according to its own leadership, nominated Trump for a Nobel Peace Prize.
Trump’s recalibration of trade
The Trump administration has pushed for a recalibration of trade policies with the world. On 2 April, the US President announced a 10 percent baseline tariff on all imports, while singling out a number of countries with large surpluses for additional tariffs. India was poised to be hit with an additional tariff of 26 percent.
However, the additional tariffs were paused for three months – a deadline that ended 9 July. Trump, however, gave countries time till 1 August to strike a deal.
India and the US have been holding intense negotiations over a mini-deal, as well as on a first tranche of a larger bilateral trade agreement. Indian negotiators were most recently in the US earlier this month, with hopes of a deal to be signed soon. New Delhi has made a number of concessions, including allowing certain processed dairy products to be exported from the US and also indicating a willingness to open small portions of its agricultural sector. However, negotiations have stalled with the US seeking further access to India’s agricultural and dairy markets, which is a redline for New Delhi.
While the Indian government acknowledged Trump’s statement Wednesday, New Delhi maintained that it will take all “necessary steps” to maintain “national interest.” A few hours after highlighting the 25 percent tariffs on Indian goods, the US President said in an interaction with the press that the final tariffs will be clearer by the end of this week, while also taking exception to New Delhi’s continued membership within BRICS.
BRICS (Brazil, Russia, India, China and South Africa along with five other countries) has come under fire from Trump as being an anti-American grouping looking to move its trade away from the dollar. India has maintained that the grouping has no such policy, but the members of BRICS have been threatened by Trump in recent weeks.
The American administration has imposed a 50 percent tariff on all goods from Brazil, with Trump having a particular grouse on the judicial investigations into former Brazilian President Jair Bolsonaro.
On Wednesday, the American leader also announced a trade deal with South Korea, highlighting that the East Asian economy will be investing $350 billion into US companies selected by Trump, while purchasing $100 billion in LNG. The deal will see South Korea charged a 15 percent tariff for all its goods exported to the US. The deal is similar to the one struck with Japan last week.
(Edited by Tony Rai)
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