The United States has announced new customs policies that could benefit Nepal due to higher tariffs on Nepal’s competitors while keeping tariffs on Nepali exports relatively lower, according to trade experts.
The policy, introduced by US President Donald Trump’s administration, imposes at least 10% tariff on all countries including Nepali goods that previously enjoyed zero tariffs. However, this rate remains significantly lower than the additional 37% tariff on Bangladeshi and Chinese goods and 26% on Indian goods. Among South Asian countries, Sri Lanka faces the highest tariff hike.
Stakeholders believe this policy could make Nepali exports more competitive in the US market. Pashupati Dev Pandey, president of the Nepal Readymade Garment Industry Association, welcomed the decision, noting that Nepal's garment industry would face lower tariffs compared to other major exporters. Key Nepali exports like hardened cheese, carpets, flag cloth, and herbal oils were previously exempt from tariffs under the Nepal Trade Preference Program (NTPP) and the Generalized System of Preferences (GSP).
Potential Impact on Nepal’s Trade
The US has justified the tariff hike as a reciprocal measure against countries that impose higher duties on American goods. While countries like Bangladesh, India, China, and Sri Lanka have levied higher tariffs on US exports, Nepal has maintained an average 10% duty, aligning with the newly imposed US tariff on Nepali goods.
According to trade experts, this policy could open new opportunities for Nepal’s garment industry. “With higher tariffs on competing countries, Nepali garments could gain a stronger foothold in the US market,” said an expert. “The demand for garments in the US remains steady, which could help revive Nepal’s struggling garment sector.”
The policy also affects other major textile-exporting nations, including Cambodia, Vietnam, and Turkey, which now face higher tariff rates than Nepal. Paras Kharel, executive director of think tank SAWTEE, described the move as beneficial for Nepal, stating that lower customs duties on Nepali products compared to its rivals will enhance competitiveness.
Government's Response and Future Negotiations
The Government of Nepal is closely monitoring the situation, with officials seeing potential benefits in the short term. Commerce Secretary Govinda Bahadur Karkee noted that the policy could improve Nepal’s access to the US market but emphasized the need for further analysis.
The US has extended tariffs on goods from 180 countries, including Nepal. This means that some Nepali products previously exempt from duties will now face tariffs. Under the NTPP, the US had provided duty-free access to 77 Nepali goods for 10 years following the April 2015 earthquake. However, with the latest policy, even some of these items may face new duties.
Experts say Nepal should engage in diplomatic efforts to negotiate better terms. “The upcoming Trade and Investment Framework Agreement (TIFA) meeting in September 2025 in the US will be crucial for discussing tariff reductions,” Karkee said. He added that Nepal could argue for tariff exemptions given its ongoing transition from a Least Developed Country (LDC) and its small share in US imports.
Trade Data and Future Prospects
According to the Trade and Export Promotion Center, Nepal exported over 400 items worth Rs 17.31 billion to the US in Fiscal Year 2023/24 while importing Rs 19.48 billion worth of US goods. In the first six months of the current fiscal year, Nepal has exported Rs 8.63 billion in goods to the US while importing Rs 12.23 billion.
Experts also warn that India may push for similar tariff negotiations with the US, which could impact Nepal's relative advantage. “Nepal must remain proactive in trade talks, as India is already exploring ways to reduce US tariffs through bilateral negotiations,” a trade analyst noted.
With Nepal’s garment industry struggling to maintain its foothold in the US market, the latest tariff adjustments could provide a competitive edge—but only if the country effectively lobbies for further concessions.
