ISLAMABAD: Pakistan and the United States formally began negotiations on reciprocal tariffs on Friday, agreeing to get into technical discussions in the coming weeks, according to a statement from the Ministry of Finance.

Finance Minister Muhammad Aurangzeb and US Trade Representative Jamieson Greer launched the negotiations through a telephonic conference call.

`The two sides exchanged their viewpoints through a constructive engagement with the understanding that detailed technical-level discussions would follow in the coming few weeks,` the statement said.

Both parties expressed confidence in advancing the talks towards a timely and successful conclusion.

The move follows Mr Aurangzeb`s visit to Washington last month during the IMFWorld Bank spring meetings, where he raised Pakistan`s concerns over trade tariffs and expressed a willingness to resolve outstanding issues through dialogue.Soon after assuming the office early this year, US President Donald Trump announced an increase in trade tariffs on Pakistani products later suspended temporarily as part of his global trade rebalancing to the US`s favour. Prime Minister Shehbaz Sharif had immediately called for bilateral talks to address the matter.

Pakistan believed the increased tariffs, if actually applied by the US, could severely impact its export sector, leading to macroeconomic instability, significant job losses, and a critical reduction in foreign exchange earnings.

The `proposed reciprocal tariffs by the United States could have a devastating impact on the country`s export sector`, the state-owned think tank Pakistan Institute of Development Economics (Pide) observed in a policy note last month.

Thenote-titled`ImpactofUnilateral Tariff Increase by United States on Pakistani Exports` analysed the consequences of a proposed 29 per cent reciprocal tariffs on Pakistani exports to the US.

It said that the total duty could reach 37.6pc when combined with the existing 8.6pc Most Favoured Nation (MFN) tariff. The result would likely be a 20-25pc decline in exports to the US, translating into an annual loss of $1.1bn to $1.4bn, with the textile sector bearing the brunt.

In fiscal year 2024, Pakistan exported $5.3bn worth of goods to the United States, making it the country`s largest single-country export market. A significant portion of these exports were textiles and apparel, which already face tariffs as high as 17pc.

If the proposed tariffs are implemented, Pakistan`s price competitiveness would be severely eroded, potentially allowing regional competitors, such as India and Bangladesh, to capture market share. The economic consequences would extend beyond textiles, the Pide analysis warned.

An official statement from the Office of the United States Trade Representative (USTR) put total US goods trade with Pakistan at an estimated $7.3bn in 2024. US goods exports to Pakistan in 2024 were $2.1bn up 4.4pc ($90.9 million) from 2023.

US goods imports from Pakistan totalled $5.1bn, up 4.9pc ($238.7m) from the previous year. The US goods trade deficit with Pakistan stood at $3bn in 2024, a 5.2pc increase ($147.9m) over 2023.

Anwar Iqbal in Washington also contributed to this report