The customs duty exemption facility that the US has been providing to Nepal for the past 10 years has expired. With this, goods exported from Nepal to the US will now have to pay customs duty ranging from at least 11.2 percent to 30 percent, said Krishnaraj Bajgain, Information Officer at the Trade and Export Promotion Center.

Nepal had received customs exemption on 77 items including handicrafts, shawls, and travel accessories in the last 10 years. Despite receiving this facility, Nepal still has a trade deficit with the US.

‘When exporting 77 items, a minimum tax of 1.2 percent to 20 percent is levied, depending on the item, and an additional 10 percent tax has to be paid,’ he said, ‘The government is taking various initiatives to increase this facility.’ In the five months of the current fiscal year, Nepal has exported goods worth only Rs 7.42 billion while importing goods worth Rs 10.35 billion from the US. During these five months, Nepal-US foreign trade has been in deficit by Rs 2.92 billion.

The US had provided customs exemption as per the US Trade Facilitation and Trade Enforcement Act of 2016. This Nepal-focused program was approved for 2025. The exemption facility also ended with the end of 2025 on Wednesday. In order to expand trade, investment and technical cooperation and strengthen economic relations between the two countries, a comprehensive trade and investment agreement (TIFA) was signed between Nepal and the United States in April 2068.

In the fiscal year 2081/82, while goods worth 25.96 billion rupees were imported from the United States, only 18.32 billion rupees were exported. That year too, Nepal had a trade deficit with the United States. In the fiscal year 2080/81, while goods worth 19.48 billion rupees were imported, 17.31 billion rupees were exported.

In the fiscal year 2079/80, while goods worth 19.42 billion rupees were imported, 19.57 billion rupees were exported. According to the Customs Department, there was a profit of 146.5 million rupees that year. Even with zero customs duty on most goods, Nepal has not been able to increase exports.

After the 2072 earthquake, the US had provided Nepal with duty-free facilities on 77 items under the ‘Harmonized Tariff Schedule’. But Nepal has not been able to utilize the opportunity of the exemption facility, said trade expert Ravi Shankar Sainju. ‘After the 2072 earthquake, the US had provided special exemptions for 10 years targeting the earthquake victims,’ said Sainju. ‘The exemption facility was provided for handicrafts, wool and other materials produced in the villages. It was given to those produced domestically.’

The US had provided customs exemptions for 10 years for organizations related to home businesses. Sainju comments that the facility was reduced without their knowledge. If it was possible to expand the market in the US by using the exemption facility, Nepal would have missed that opportunity, he said. ‘We could have expanded the market by using the exemption facility we received, we could have built our own brand, but that did not happen, we are still doing business at a loss,’ he said.

US President Donald Trump imposed high customs duties on goods from 185 countries in Chaitra 2008. However, the US has imposed only an additional 10 percent tax on goods imported from Nepal. That is why experts say that Nepal can get a comparative advantage.

The facility provided by the US government through a law for the recovery of Nepal's economy after the 2072 earthquake was devastating, said Sharad Bikram Rana, executive director of the Trade and Export Promotion Center. 'Although the customs exemption facility was provided, items with export potential were not included in it. During repeated discussions, we even requested to include export items. But it did not work,' he said.

Rana said that efforts have been made to further increase the customs exemption facility from the diplomatic and staff levels. 'We have made efforts from various levels, since the facility was provided by a law, it depends on the government,' he said, 'it would have been good to extend the facility for a longer period by adding items like carpets that have export potential.'