Dr. Ikramul Haq & Abdul Rauf Shakoori
The recent executive order signed by the President Donald J. Trump on July 31, 2025, marks a paradigm shift in the United States’ trade policy by further modifying reciprocal tariff rates. The fresh proclamation is built on the earlier Executive Order 14257, which declared a national emergency due to persistent trade deficits and imposed additional tariffs to address perceived challenges. The new adjustments aim to refine these measures, targeting specific trading partners while offering concessions to others based on their willingness to align with the economic and national security interests of the United States of America (USA). The implications of this policy are far-reaching, affecting not only the USA economy but also global trade dynamics, including trade relations with Pakistan, and its escalating economic ties with Iran.
The executive order introduces a tiered tariff structure, with rates varying by country. For instance, Pakistan faces a 19% additional ad valorem duty, reflecting its status as a trading partner that has yet to sufficiently address the concerns of USA about trade imbalances. The order also highlights the administration’s focus on reciprocity, as seen in the European Union’s treatment, where goods with existing tariffs below 15% will face additional duties to bring the total to 15%, while those already at or above 15% will remain unchanged. This approach highlights Trump’s strategy of leveraging tariffs to pressure trading partners into renegotiating terms more favourable to American interests.
The impact of these tariffs on the American economy is multifaceted. On one hand, they may provide short-term protection to domestic industries by making imported goods more expensive, thereby encouraging local production. On the other, they risk triggering retaliatory measures from affected countries, potentially disrupting supply chains and increasing costs for American consumers and businesses. The order’s emphasis on national security and critical supply chains suggests a long-term vision to reduce dependency on foreign imports, particularly in sectors deemed vital to economic and defense resilience.
Pakistan’s trade relationship with the USA is poised to sense the effects of these tariffs. The 19% duty could hinder Pakistani exports to the USA, particularly in textiles and other key sectors, unless Islamabad takes steps to address Washington’s concerns. At the same time, Pakistan is actively seeking to diversify its trade partnerships, as evidenced by Iranian President Masoud Pezeshkian’s first two-day [August2-3, 2025] visit to Islamabad.
The visit, aimed at strengthening bilateral ties, included discussions on elevating annual trade between Iran and Pakistan to US$10 billion, with a focus on enhancing border trade and connectivity through the China-Pakistan Economic Corridor (CPEC) and the Silk Road.
The Iranian president’s visit emphasizes the growing economic and strategic alignment between Tehran and Islamabad. The two nations discussed joint border markets, regional security, and energy cooperation, with Iran positioning itself as a gateway for Pakistan to access European markets via overland routes. The timing of the visit was notable, coming amid the efforts of President Trump to isolate Iran economically. Pakistan’s willingness to deepen ties with Iran, despite potential friction with Washington, reflects its pursuit of a balanced foreign policy and its need to secure energy resources, including oil, to address chronic shortages.
The tariff policy of USA and Pakistan’s engagement with Iran highlight the complex interplay of global trade and geopolitics. While the Trump administration’s tariffs aim to recalibrate trade relationships in America’s favour, they also risk pushing countries like Pakistan closer to its adversaries. For Pakistan, the challenge lies in navigating its economic dependencies—relying on the USA for export markets while turning to Iran for energy and regional connectivity. The success of these strategies will depend on Islamabad’s ability to negotiate favourable terms with both Washington and Tehran, as well as its capacity to mitigate the economic fallout from higher tariffs.
The broader implications of the executive order extend beyond bilateral trade. By framing trade deficits as a national security threat, President Trump is signaling a more aggressive stance on economic policy, one that prioritizes protectionism over globalization. This shift could reshape global trade networks, encouraging regional blocs and alternative supply chains. For Pakistan and Iran, the convergence of their economic interests offers a counterbalance to U.S. pressure, but it also raises questions about the sustainability of such partnerships in the face of potential sanctions or further trade restrictions.
The two-day official visit of Iranian President Dr. Masoud Pezeshkian to Pakistan emphasized strengthening economic cooperation, with discussions centered on increasing bilateral trade to US$10 billion. During high-level meetings with President Asif Ali Zardari and Prime Minister Shehbaz Sharif, both nations explored ways to enhance cross-border trade through land, air, and sea routes, including leveraging Pakistan’s connectivity with China via CPEC.
Key trade priorities included finalizing agreements on joint border markets and improving regional supply chains. President Pezeshkian highlighted Iran’s strategic interest in using Pakistan as a trade corridor to access European markets, while Pakistani leaders reaffirmed their commitment to deepening economic ties.
The visit by Iranian President also aimed to build on discussions from the trip of late President Ebrahim Raisi in April 2024, with both sides agreeing to expand cooperation in energy and infrastructure sectors. The talks, thus, stressed a mutual focus on countering external trade barriers and fostering long-term economic partnerships. Several trade-related agreements were also signed, signaling a shared vision for increased commercial engagement amid shifting regional dynamics.
In this overall situation, the Trump’s executive orders on tariffs represent a pivotal shift in American trade policy, with ripple effects felt across the global economy. For Pakistan, the new tariffs pose challenges but also act as a catalyst to accelerate the diversified trade partnerships, as seen in its warming ties with Iran.
The Iranian President’s visit highlights the potential for regional cooperation, particularly in energy and infrastructure, but also the risks of alienating the USA. As these dynamics unfold, the interplay of economic strategy and geopolitical maneuvering will shape the future of trade in the region and beyond. The coming months will be critical in determining whether these policies foster greater reciprocity or further fragmentation in the global trading system.
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Dr. Ikramul Haq, Advocate Supreme Court, specializes in constitutional, corporate, media, ML/CFT related laws, IT, intellectual property, arbitration and international tax laws. He holds LLD in tax laws with specialization in transfer pricing. He was full-time journalist from 1979 to 1984 with Viewpoint and Dawn. He served Civil Services of Pakistan from 1984 to 1996. He established Huzaima & Ikram in 1996 and is presently its chief partner. He studied journalism, English literature and law.
He is Chief Editor of Taxation. He is country editor and correspondent of International Bureau of Fiscal Documentation (IBFD) and member of International Fiscal Association (IFA). He is Visiting Faculty at Lahore University of Management Sciences (LUMS) and member Advisory Board and Visiting Senior Fellow of Pakistan Institute of Development Economics (PIDE).
He has coauthored with Huzaima Bukhari many books that include Tax Reforms in Pakistan: Historic & Critical Review, Towards Flat, Low-rate, Broad and Predictable Taxes (revised & Expanded Edition, Pakistan: Enigma of Taxation, Towards Flat, Low-rate, Broad and Predictable Taxes (revised/enlarged edition of December 2020), Law & Practice of Income Tax, Law , Practice of Sales Tax, Law and Practice of Corporate Law, Law & Practice of Federal Excise, Law & Practice of Sales Tax on Services, Federal Tax Laws of Pakistan, Provincial Tax Laws, Practical Handbook of Income Tax, Tax Laws of Pakistan, Principles of Income Tax with Glossary and Master Tax Guide, Income Tax Digest 1886-2011 (with judicial analysis).
He is author of Commentary on Avoidance of Double Taxation Agreements, Pakistan: From Hash to Heroin, its sequel Pakistan: Drug-trap to Debt-trap and Practical Handbook of Income Tax. Two books of poetry are Phull Kikkaran De (Punjabi 2023) and Nai Ufaq (Urdu 1979 with Siraj Munir and Shahid Jamal).
He regularly writes columns/article/papers for many Pakistani newspapers and international journals and has contributed over 2500 articles on a variety of issues of public interest, printed in various journals, magazines and newspapers at home and abroad.
X (formerly Twitter): DrIkramulHaq
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Abdul Rauf Shakoori, Advocate High Court, is a subject-matter expert on AML-CFT, Compliance, Cyber Crime and Risk Management. He has been providing AML-CFT advisory and training services to financial institutions (banks, DNFBPs, Investment companies, Money Service Businesses, insurance companies and securities), government institutions including law enforcement agencies located in North America (USA & CANADA), Middle East and Pakistan. His areas of expertise include legal, strategic planning, cross border transactions including but not limited to joint ventures (JVs), mergers & acquisitions (M&A), takeovers, privatizations, overseas expansions, USA Patriot Act, Banking Secrecy Act, Office of Foreign Assets Control (OFAC).
Over his career he has demonstrated excellent leadership, communication, analytical, and problem-solving skills and have also developed and delivered training courses in the areas of AML/CFT, Compliance, Fraud & Financial Crime Risk Management, Bank Secrecy, Cyber Crimes & Internet Threats against Banks, E–Channels Fraud Prevention, Security and Investigation of Financial Crimes. The courses have been delivered as practical workshops with case study driven scenarios and exams to insure knowledge transfer.
His notable publications are: Rauf’s Compilation of Corporate Laws of Pakistan, Rauf’s Company Law and Practice of Pakistan and Rauf’s Research on Labour Laws and Income Tax and others.
His articles include: Revenue collection: Contemporary targets vs. orthodox approach, It is time to say goodbye to our past, US double standards, Was Due Process Flouted While Convicting Nawaz Sharif?, FATF and unjustly grey listed Pakistan, Corruption is no excuse for Incompetence, Next step for Pakistan, Pakistan’s compliance with FATF mandates, a work in progress, Pakistan’s strategy to address FATF Mandates was Inadequate, Pakistan’s Evolving FATF Compliance, Transparency Curtails Corruption, Pakistan’s Long Road towards FATF Compliance, Pakistan’s Archaic Approach to Addressing FATF Mandates, FATF: Challenges for June deadline, Pakistan: Combating the illicit flow of money, Regulating Crypto: An uphill task for Pakistan. Pakistan’s economy – Chicanery of numbers. Pakistan: Reclaiming its space on FATF whitelist. Sacred Games: Kulbhushan Jadhav Case. National FATF secretariat and Financial Monitoring Unit. The FATF challenge. Pakistan: Crucial FATF hearing. Pakistan: Dissecting FATF Failure, Environmental crimes: An emerging challenge, Countering corrupt practices .
X (formerly Twitter): Adbul Rauf Shakoori
The recent publication, coauthored by these writes with Huzaima Bukhari is
Pakistan Tackling FATF: Challenges & Solutions, available at:
https://aacp.com.pk/book-detail/pakistan-tackling-fatf-challenges-and-solutions-35