Trump’s “historic” oil trade deal with Pakistan, paired with a 25% tariff threat on Indian goods, opens a new front in South Asia’s energy and trade geopolitics.
Former US President Donald Trump’s declaration of a “historic” trade agreement with Pakistan to jointly explore its “massive oil reserves” has triggered a wave of responses—both diplomatically and economically. In sharp contrast, Trump simultaneously announced punitive trade measures against India, including a 25% tariff on all goods, sparking speculation over whether Washington’s move is more about energy cooperation or diplomatic coercion.
Prime Minister Shehbaz Sharif thanked Trump for the deal, calling it a milestone in US-Pakistan relations. Meanwhile, India officially stated it has “taken note” of the developments and is studying their implications.
What the Deal Entails: Details & Claims
Trump’s announcement, made via social media, stated:
“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… Who knows, maybe they’ll be selling oil to India some day!”
While the statement lacked technical details—such as volume estimates, timelines, or specific companies involved—it was later confirmed by Pakistan’s finance ministry that discussions took place between Pakistan’s finance minister Muhammad Aurangzeb, US commerce secretary Howard Lutnick, and trade representative Jamieson Greer in Washington.
According to Radio Pakistan, the agreement includes:
- Increased market access for Pakistani exports to the US
- US support in developing Pakistan’s untapped energy resources
- Cooperation in energy, minerals, IT, and emerging sectors like cryptocurrency
Pakistan’s Oil Reality
Trump’s reference to Pakistan’s “massive oil reserves” remains ambiguous. While geological surveys have hinted at possible hydrocarbon basins—particularly offshore and in Balochistan—Pakistan has not successfully commercialized these reserves to date.
Pakistan currently imports the majority of its crude oil from the Middle East, with its domestic production standing at roughly 80,000 barrels per day (OGRA Pakistan, 2024), a fraction compared to India or global standards.
India’s Response: Official & Strategic Position
In an official statement, India said:
“India and the US have been engaged in negotiations on concluding a fair, balanced and mutually beneficial bilateral trade agreement over the last few months. We remain committed to that objective.”
The Ministry of Commerce and External Affairs has not issued any direct comment on the oil agreement itself. However, Indian officials confirmed they are evaluating the implications of Trump’s tariff announcement, which is set to take effect from August 1, 2025.
Trade Tensions: Tariff Threats and Economic Pressure
Trump accused India of maintaining the “most strenuous and obnoxious” trade barriers. He declared:
“India will therefore be paying a tariff of 25 per cent, plus a penalty for the above [Russian military and energy imports], starting August 1.”
This echoes previous trade frictions during Trump’s earlier presidency, where India lost its GSP status and responded with retaliatory duties.
US-India-Pakistan: Trade and Energy Comparison
| Indicator | India | Pakistan |
|---|---|---|
| Oil Reserves (Proven) | ~4.5 billion barrels (BP, 2024) | ~0.35 billion barrels (OGRA Pakistan) |
| Daily Oil Production (2024) | ~750,000 barrels/day | ~80,000 barrels/day |
| US-India Trade Volume (2023–24) | $118.3 billion (Ministry of Commerce) | ~$6.5 billion (Pakistan Bureau of Stats) |
| US Imports Share in Total Trade | ~11% of India’s exports | ~16% of Pakistan’s exports |
| US FDI in Energy | ~$13 billion cumulative (DPIIT) | Minimal FDI in energy sector |
| Tariff Status | Facing 25% proposed tariff from Aug 1 | Receives tariff concessions in new deal |
Broader Geopolitical Context
The timing of Trump’s deal with Pakistan—coming right after major trade agreements with Japan, the UK, and the EU—suggests a layered motive. As The Hindu BusinessLine noted, the US may be using energy diplomacy and trade pressure to reassert leverage in South Asia, especially as India deepens ties with BRICS and continues energy purchases from Russia.
Meanwhile, Trump’s remarks targeting India’s BRICS membership and Russian imports add fuel to speculation that this isn’t just about Pakistan’s oil—but about recalibrating US-India trade terms on Washington’s terms.
India’s Current Position: Watchful and Diplomatic
While there is no retaliatory response yet from New Delhi, the situation remains fluid. According to The Indian Express and Mint, India is closely reviewing the policy announcement ahead of the August 1 tariff deadline.
As of now:
- India has not altered its current trade policies with the US
- Negotiations for a bilateral trade agreement continue
- No comment has been made on Pakistan’s oil deal
The US-Pakistan oil trade agreement, paired with punitive rhetoric towards India, represents a complex turn in South Asia’s geopolitical and trade landscape. Whether this is a genuine energy partnership or a pressure tactic aimed at extracting concessions from New Delhi, the message is clear: South Asia is once again a focal point in American strategic recalibrations.
For India, the challenge will be to maintain diplomatic balance while safeguarding its trade and energy interests—without reacting to provocations or speculative developments.
