Pakistan and the International Monetary Fund (IMF) have reached an agreement to lower the country’s weighted average tariffs to 6 percent over the next five years, nearly halving the current rate of 10.6 percent.
This move aims to enhance economic sincerity by increasing foreign competition, making Pakistan’s tariffs the lowest in South Asia.
The government will begin reducing tariffs in July 2025 to lower local car prices by cutting import costs in the auto sector. The goal is to achieve a 6 percent average tariff by 2030.
The government will implement these cuts through two key policies: the National Tariff Policy, aiming for an overall tariff rate of 7.4 percent by 2030.
The Auto Industry Development and Export Policy (AIDEP), introduced additional reductions for the automobile sector.
While most industries will see tariffs set at 7.4 percent, this is slightly higher than the initially planned 7.1 percent.
Among other changes, the government will completely stop additional customs duties, reduce regulatory duties by 80 percent, and withdraw certain concessions outlined in the Customs Act’s fifth schedule.
The government will remove a 7 percent additional customs duty on specific goods and a 2 percent duty on zero-tariff slab items starting in July this year.
Although the IMF originally pushed for a 5 percent weighted average tariff, the government has committed to lowering it to 6 percent instead.
The federal cabinet is expected to approve the new tariff policy by June and fully implement it in the 2025-26 budget.
For the automobile sector, authorities will phase out all additional customs and regulatory duties by 2030, capping the maximum import tariff at 20 percent.