Pakistan and IMF Agree to Slash Tariffs to 6 percent by 2030

Pakistan and the International Monetary Fund (IMF) have settled on a plan to lower the country’s average tariffs from 10.6 percent to 6 percent over the next five years. This change aims to boost foreign competition and make Pakistan the South Asian country with the lowest tariffs.

The tariff reduction is expected to bring down local car prices by cutting import and related costs in the auto industry. It will start in July 2025 and reach the 6 percent goal by 2030.

The policy will roll out under two main plans: the National Tariff Policy, targeting a 7.4 percent rate by 2030, and the Auto Industry Development and Export Policy (AIDEP), which will push for even lower rates in the auto sector. Outside of cars, the tariff will be 7.4 percent, a bit higher than the earlier 7.1 percent target.

The plan also includes getting rid of extra customs duties completely, cutting regulatory duties by 80 percent, and removing several benefits from the Customs Act’s fifth schedule. A 7 percent additional customs duty on some items and a 2 percent duty on zero-tariff goods will also end starting July this year.

The IMF originally wanted a 5 percent average tariff, but Pakistan agreed to 6 percent. The federal cabinet is expected to approve this before June ends, with the changes fully in place for the 2025-26 budget.

For the auto industry, all extra customs and regulatory duties will be gone by 2030, with import tariffs capped at 20 percent. Regulatory duties on vehicles will drop by 55-90 percent in the first year, with more reductions later. A new 6 percent customs duty level will be added, and existing duties on different levels will decrease gradually.