Pakistan and the International Monetary Fund (IMF) have reached an agreement to reduce the country’s weighted average tariffs to 6 percent over the next five years, halving the current rate of 10.6 percent.
The reduction is expected to have a direct impact on local car prices, which are expected to decrease as a result of lower import and related costs within the auto sector.
Car costs in Pakistan are expected to decline starting July 2025 as part of a new tariff reduction agreement among the federal authorities and the International Monetary Fund (IMF). The deal, finalized under the IMF’s guidance, aims for a gradual cut in Pakistan’s average tariff charge to 6 percent by 2030, down from the current 10.6 percent.
The changes are designed to grow foreign opposition and market access, potentially making Pakistan the lowest-tariff country in South Asia. The reductions can be carried out under the national Tariff policy and the auto industry development and export coverage (AIDEP), with the car sector among the largest beneficiaries.
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For the car industry, the government plans to eliminate all extra customs and regulatory duties by 2030. From the first year of implementation, regulatory duties on vehicles will drop between 55 to 90 percent, followed by gradual reductions annually.
Along with vehicle import costs falling, a brand new 6 percent customs duty slab will be introduced at the same time as duties throughout existing slabs may be progressively lowered. The maximum import tariff in the auto region can be capped at 20 percent once the policy is fully rolled out.
The broader tariff reform may also eliminate numerous other levies. Additional customs duties could be absolutely removed, regulatory responsibilities slashed by 80 percent, and multiple exemptions under the 5th schedule of the Customs Act withdrawn.
A 7 percent duty on precise imported items and a 2 percent duty on 0-rated slabs may also be abolished starting July this year. Those modifications are intended to streamline trade, lessen prices, and align Pakistan’s tariffs with global standards.
Even though the IMF initially drove for a 5 percent common tariff target, the authorities have committed to a 6 percent ceiling instead. The brand-new tariff roadmap is anticipated to receive final cabinet approval before the end of June and could be included within the 2025-26 federal budget.
Once fully implemented, the reforms are likely to make imported vehicles more affordable and sell greater consumer choice while encouraging local manufacturers to stay competitive.