Every March, Washington publishes its National Trade Estimate (NTE) Report. This annual report looks at how the world treats American commerce. The 2026 edition, released by the Office of the United States Trade Representative (USTR), covers over 60 countries in more than 500 pages. Pakistan gets its own chapter. It highlights a country with real commercial growth but also ongoing structural issues that continue to frustrate American businesses.
The headline numbers are encouraging. Total US-Pakistan goods trade reached $8.7 billion in 2025. American exports to Pakistan increased by 56.6%, totaling $3.3 billion. At the same time, the bilateral trade deficit shrank by nearly 30% to $2.1 billion. The US services surplus nearly tripled to $610 million.
For a country that faced a balance-of-payments crisis just two years ago, these gains are significant. However, the NTE report does not just evaluate trade volumes; it also catalogs the problems. Pakistan’s chapter is extensive.
Tariffs, SROs, and Customs Problems
Pakistan’s average applied tariff rate is a moderate 10.3%, but the situation is more complex. The average WTO-bound rate stands at 60.8%, meaning Pakistan could raise tariffs sharply at any time. American exporters are particularly frustrated by the country’s heavy use of Statutory Regulatory Orders (SROs). These orders let the government change tariff rates and trade rules with little notice and no public input. The IMF has urged Pakistan to eliminate SROs as part of its loan programs. Pakistan has repeatedly promised to do this, yet the 2026 NTE reports that SROs continue to be issued without a clear timeline for removal.
Customs procedures add to the difficulties. US exporters say that Pakistani officials sometimes disregard declared transaction values and impose arbitrary minimum valuations instead. Two specific customs rules, 389 and 391, require physical invoices in shipping containers, creating compliance issues for companies that use intermediaries or modern logistics systems.
In agriculture, the US beef ban is still in place despite an agreement in principle to reopen the market in April 2024. This deal is stalled due to labeling rules and has not yet taken effect. In a more positive development, Pakistan received its first shipment of American genetically engineered soybeans in February 2025 after a two-year import ban, with import licenses extended through 2026.
The Digital Economy
In the arena of the digital economy, the gap between Pakistan’s ambitions and its real policies becomes evident. The country presents itself as a growing technology hub. However, the NTE report outlines a digital regulatory environment that undermines this image.
A 2025 amendment to Pakistan’s Prevention of Electronic Crimes Act (PECA) created a new regulator, the Social Media Protection and Regulatory Authority (SMPRA). This authority has wide powers to order content removal, often within 48 hours. Companies must also monitor livestreams and provide decryption keys when asked.
A Cloud First Policy from 2022 mandates local storage of broad categories of data. The State Bank prevents banks from using foreign cloud servers for core systems. In 2024, a securities regulator expanded similar localization rules to digital lenders.
A May 2025 proposal from the State Bank would require consumers to activate a domestic PayPak debit card to access international payment networks. This rule targets US payment firms like Visa and Mastercard.
Pakistan also frequently shuts down mobile internet during political protests. The USTR says this disrupts business operations and harms investor confidence. Pakistan remained on the USTR’s Special 301 Watch List in 2025, with counterfeiting and piracy still common in pharmaceuticals, software, and digital content.
Reading the 2026 NTE report on Pakistan reveals a familiar pattern. Pakistan, being a country that understands reform, commits to it under international pressure, and then fails to follow through. The TIFA framework for bilateral trade dialogue has existed since 2003 and remains largely unchanged.
The commercial relationship is expanding, which is important. However, trade volumes can show a difficult reality. Pakistan is still a challenging market for American businesses, and Washington is paying attention.
