IslamabadPakistan and the International Monetary Fund (IMF) reached an agreement to reduce the average weighted definitions in the country to 6 percent over the next five years, and half the current rate of 10.6 percent. This strategic step is designed to open the Pakistani economy on greater foreign competition, making it the country with the slightest tariff in South Asia.
The reduction is expected to have a direct impact on the prices of local cars, which is expected to decrease as a result of low import costs and related costs within the auto sector. The tariff cuts will get July 2025, with the ultimate goal of achieving a rate of 6 percent by 2030.
This new policy will be implemented under two main frameworks: the national tariff policy, which aims to reduce the definitions to 7.4 percent by 2030, and the automotive and export policy (ADEP), which will witness more discounts in the auto sector. With the exception of the auto industry, the tariff will now be set by 7.4 percent, which is slightly higher than the previous target of 7.1 percent.
It is worth noting that this policy will also lead to the complete cancellation of additional customs duties, the reduction of 80 percent in organizational duties, and the withdrawal of many concessions under the fifth table of the Customs Law. In addition, an additional customs duty will be removed by 7 percent on some goods, as well as fees 2 percent on zero panels, starting from July this year.
While the International Monetary Fund initially suggested reducing the average weighted tariff to 5 percent, the federal government has committed to 6 percent. The new tariff policy is expected to be approved by the Federal Cabinet before the end of June, with the full implementation of the 2025-26 budget.
For the auto sector, all additional customs and regulatory duties are determined to get rid of them by 2030, with the maximum tariffs for imports that were crowned by 20 percent. Regulatory duties on vehicles will witness significant discounts from 55-90 percent in the first year, followed by other discounts in subsequent years. A new customs duties board will also be presented by 6 percent, while the duties on different panels will gradually be reduced over time.