Worldwide Tariff Effects on Nepal: Import Duties & Global Trade Impact 2025

In an increasingly interconnected global economy, tariff policies in major economies like the United States, India, and China have direct ripple effects on Nepal. Combined with the domestic changes introduced in the Finance Bill 2081 (2024/25), businesses and consumers in Nepal are facing a new landscape of import duties and trade regulations.

This article breaks down the worldwide tariff effects on Nepal, the specific changes in import duties for 2025, and what this means for the Nepali market.

The Global Context: US Tariffs & NTPP Expiration

The global trade environment in 2025 is characterized by rising protectionism. For Nepal, two major international factors are at play:

1. The US “Reciprocal Tariff” Proposal

The United States has mooted a 10% reciprocal tariff on imports. While Nepal’s export volume to the US is relatively small compared to giants like China, the US remains Nepal’s second-largest export destination.

• Impact: If implemented without exemptions, this could make Nepali ready-made garments, pashmina, and carpets 10% more expensive for American buyers.
• The Silver Lining: If the US imposes significantly higher tariffs on competitors like China or India, Nepali goods might actually gain a competitive price advantage, provided Nepal can negotiate favorable terms.

2. Expiration of the Nepal Trade Preference Program (NTPP)

The NTPP, which grants duty-free access for 77 Nepali products (including carpets, headgear, specialize textiles) to the US, is set to expire in December 2025.

• Urgency: Renewal is critical. Without it, these products will revert to standard tariff rates, potentially shrinking Nepal’s export competitiveness. The upcoming TIFA council meeting in late 2025 will be decisive.

Domestic Changes: Finance Bill 2081/82 (2025)

Domestically, the impact of tariffs is felt most sharply through the Customs Act and the annual Finance Bill. The Fiscal Year 2081/82 has introduced several structural changes to protect domestic industry and regulate forex outflow.

1. Electric Vehicle (EV) Progressive Taxation

The government has maintained a progressive tax structure for EVs to balance environmental goals with revenue needs. The days of flat low taxes are over for high-performance EVs.

Motor Power (kW)	Customs Duty	Excise Duty
Up to 50 kW	10%	0%
50 - 100 kW	15%	5%
100 - 200 kW	20%	15%
200 - 300 kW	40%	35%
Above 300 kW	60%	50%

• Effect: Entry-level EVs remain affordable, but high-end luxury EVs have become significantly more expensive.

2. “Green Tax” on Petroleum

To discourage fossil fuel consumption, a new Green Tax (Harit Tax) has been levied:

• Petrol & Diesel: NPR 1 per liter.
• Lubricant Oil: 1% tax.
• Coal: 1% tax (corrected from flat rate). This is separate from the Infrastructure Development Tax.

3. Protectionism for Agriculture & Manufacturing

To boost local production (Make in Nepal), import duties have been hiked on goods that can be produced domestically:

• Potatoes & Onions: In a major reversal from the previous year, VAT has been removed on these essential vegetables to lower consumer prices. However, the government has maintained specific customs duties to balance protection for local farmers.
• Furniture & Wood: Increased duties on imported wooden furniture to support the local timber industry.
• Baby Products: Import duty on items like baby strollers has jumped from 5% to 30%, classified as non-essential luxury goods.
• Export Duty on Red Lentils: A new export duty of Rs. 1 per kg has been imposed on split red lentils.

Impact on Importers and Consumers

For Importers

• HS Code Re-classification: Importers must be vigilant about the correct Harmonized System (HS) codes. Misclassification can lead to heavy fines under the Customs Act 2064.
• Green Taxation: Factoring in the green tax for logistics and transport costs is essential for pricing strategies.

For Consumers

• Higher Prices for Luxury Goods: Imported electronics, high-end EVs, and specific consumer goods will see price hikes.
• Shift to Local Brands: The government’s clear intent is to push consumers towards domestically produced alternatives, especially in agriculture and basic manufacturing.

Conclusion

The year 2025 is a turning point for Nepal’s tariff regime. While global currents like US trade policies pose uncertainty, the domestic policy is clearly pivoting towards import substitution and revenue generation from luxury segments.

Legal Note: Tariff rates are subject to change with amendments to the Finance Act. Importers should always verify the latest rates with the Department of Customs or consult a corporate lawyer before large-scale consignments.