ISLAMABAD: Last week’s interim trade agreement between the United States (US) and India marks a significant shift in global trade dynamics, with potential repercussions extending beyond the two countries.
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Under the joint statement issued on February 6, 2026, the United States agreed to reduce tariffs on Indian goods from 25% to 18%, while India committed to eliminating or significantly lowering tariffs and non-tariff barriers on US industrial goods and a wide range of agricultural products. India also pledged to purchase $500 billion in US goods over the next five years, representing a substantial expansion of market access.
In return, President Trump rescinded the additional 25% duty on Indian products and secured India’s commitment to stop directly or indirectly importing Russian oil. The two countries also agreed to expand defence cooperation over the next decade and coordinate on sensitive technology export controls and non-market practices by third parties, a reference to China.
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Prime Minister Narendra Modi praised President Trump’s leadership, while Trade Minister Piyush Goyal highlighted that India had safeguarded sensitive agricultural and dairy products. Opposition leaders, however, criticised the deal, calling it a concession that could undermine domestic manufacturing and the ‘Make in India’ strategy.
For Pakistan, the agreement carries strategic implications. The United States is Pakistan’s largest single-country export market, with a trade surplus of around $3 billion. Any changes in US tariff structures or market access could affect critical sectors such as textiles and apparel. Analysts argue that Pakistan’s reliance on unilateral preferences and narrow trade arrangements has left it increasingly marginalised, highlighting the need for a comprehensive and forward-looking trade strategy.
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Experts note that while India is moving from resistance to accommodation to manage trade asymmetries, Pakistan now has a better opportunity to negotiate substantive bilateral agreements with major trading partners. The challenge, observers say, lies in political will to pursue meaningful reforms beyond ad hoc or symbolic arrangements.
The deal underscores the shifting balance in regional trade relations and the growing importance of strategic economic planning for South Asian economies.