Despite the substantial growth of the USA-India trade, 18 times larger than the trade between the USA and Pakistan, President Trump favors Pakistan over India for reasons that include...
In an unexpected move, President Donald Trump announced a joint oil development deal with Pakistan, bypassing India despite the much larger US-India bilateral trade relationship. This decision, made after imposing a 25% tariff on Indian goods, appears to be part of Trump's strategy to pressure India while seeking to strengthen economic ties with Pakistan.
Key points explaining this move and its impact include:
- Strategic Pressure on India: Trump's announcement came soon after the tariff imposition, suggesting an intent to leverage Pakistan-US economic ties as a counterbalance against India. Trump’s public mention of possibly selling Pakistani oil to India seemed to underscore this competitive signaling.
- Questionable Oil Potential in Pakistan: Experts dismissed the deal's substance because Pakistan is not known for substantial proven oil reserves. Analysts noted Pakistan's oil reserves are limited, with no public data validating the notion of offshore reserves. India, by contrast, ranks significantly higher globally in proven reserves.
- Ambiguity and Limited Details: The deal’s specifics remain unclear, with ongoing discussions and no concrete timelines or firm commitments publicly available. It may be more of a political statement than a finalized commercial agreement.
- Impact on US-India Relations: The announcement and tariff imposition strained US-India relations, which prior to this had been strong and growing, particularly in trade and strategic partnerships. India's officials and experts viewed the Pakistan deal skeptically, reflecting diminishing US support for India’s regional economic prominence at this moment.
In the fiscal year 2024-25, US bilateral trade with Pakistan was estimated to be $7.3 billion, a 4.9% increase from the previous year. India, however, remained the US's largest trading partner for the fourth consecutive year, with a total bilateral trade of $131.84 billion. India had a trade surplus with the US, while the US suffered a trade deficit of $3 billion with Pakistan, a 5.2% increase from 2023.
India produced over 600,000 barrels per day of oil in February 2025, while Pakistan's oil production was only 68,000 barrels per day in the same year. It is worth noting that Pakistan does not have proven oil reserves.
The announcement of the oil deal with Pakistan was made after top officials of India and the US had held many rounds of talks for a Bilateral Trade Agreement or at least a tariff deal. India's imports from the US were $45.33 billion, while US exports to Pakistan were $2.1 billion, up 4.4% from 2023.
In conclusion, Trump's announcement of an oil deal with Pakistan, despite India's larger trade volume with the US, functioned as a political move to exert economic pressure on India while seeking to bolster ties with Pakistan. However, given Pakistan’s limited oil reserves and the deal’s unclear terms, the impact was more symbolic and politically charged than a substantive reshaping of regional energy or trade dynamics.
- Despite having a larger US-India bilateral trade relationship, President Donald Trump announced a joint oil development deal with Pakistan, which could be seen as a strategic move to pressure India and strengthen economic ties with Pakistan.
- The decision to bypass India and collate with Pakistan in the oil sector, despite Pakistan having limited oil reserves, raises questions about the substance of the deal and its potential impact on regional energy dynamics.
- In contrast to Pakistan, India is a significant global player in proven oil reserves, with India producing over 600,000 barrels per day of oil compared to Pakistan's 68,000 barrels per day.
- The announcement of the oil deal with Pakistan came after many rounds of talks for a Bilateral Trade Agreement or a tariff deal between India and the US, indicating that the deal may have political undertones rather than being a substantive reshaping of the trade relationship.
