Decoding US's reciprocal tariffs: A Nepali perspective

Edited by Kshitiz Dahal and Paras Kharel ()

in Books from South Asia Watch on Trade, Economics and Environment

Abstract: Following the sweeping tariffs announced by the United States (US) on 2 April 2025, Nepal, along with virtually all other countries in the world, is subject to an additional ad valorem duty of 10 percent on almost all goods exported to the US-the second-largest export destination for Nepal. The announcement further hit several countries that ran a sizeable trade surplus with the US with additional tariffs, resulting in country-specific additional ad valorem duties ranging from 10 percent to 50 percent. Thus, it appeared that Nepal could benefit from a relative tariff advantage. However, the events that have unfolded-for instance, the suspension of additional reciprocal tariffs (beyond the baseline 10 percent)-indicate that the road ahead is full of uncertainties. An important question, therefore, is whether Nepal can enhance its exports to the US in the face of emerging challenges-an increase in tariffs in the US market, the unlikely extension of the Nepal Trade Preference Program (set to expire in 2025), the unlikely reinstatement of the Generalized System of Preferences (GSP) that expired in 2020, a potential reduction in tariff preferences if other countries are able to strike trade deals with the US, and general uncertainty. Against this background, this brief note provides an overview of the new reciprocal tariff regime and its potential implications for Nepal's exports to quickly alert policymakers, the private sector and other relevant stakeholders to the new dimensions in Nepal-US trade so that appropriate measures can be taken.

Keywords: Tariffs; reciprocal tariffs; Nepal-US trade; Nepal Trade Preference Program (search for similar items in EconPapers)
Date: 2025
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