An economic expert highlights the potential for Nepal to gain a competitive edge in international trade due to U.S. President Donald Trump’s recently imposed high tariffs on Nepal’s neighboring countries, China and India. According to Dr. Chandra Mani Adhikari, a prominent economic expert in Nepal, the country may find opportunities amidst the challenges posed by Trump’s recent tariff policy.
In an interview, Dr. Adhikari noted that while the U.S. has imposed a 10% tariff on Nepali goods—a relatively low rate compared to tariffs of up to 34% on China and 26% on India—Nepal could leverage this disparity to boost its exports to the U.S. market.
The expert suggests that Nepal, a small but strategically located nation nestled between the two Asian giants, could see an uptick in export opportunities, particularly in sectors like textiles, handicrafts, and agricultural products, which already form a significant portion of its trade with the U.S. In 2024, Nepal exported goods worth approximately $120.5 million to the U.S., with key items including readymade garments, woolen carpets, and pashmina products. The lower tariff rate could make these goods more competitively priced compared to similar products from China and India, potentially boosting demand and encouraging foreign investment in Nepal’s manufacturing capabilities.
Nepal’s geographic proximity to China and India also presents a unique advantage. Companies in these heavily tariffed nations might consider relocating production facilities to Nepal to take advantage of the lower U.S. tariff rate while maintaining access to regional supply chains. This could lead to an influx of capital and job creation in Nepal, a country that has historically struggled with economic development and a reliance on remittances from its diaspora. However, Dr. Adhikari cautions that Nepal’s ability to capitalize on this opportunity hinges on the government’s capacity to streamline infrastructure, improve trade logistics, and attract foreign investors—areas where the nation has faced challenges in the past.
The total U.S. goods trade with Nepal was estimated at $241.4 million in 2024. U.S. goods exports to Nepal in 2024 reached $120.9 million, a 91.9 percent increase ($57.9 million) from 2023. Meanwhile, U.S. goods imports from Nepal totaled $120.5 million, a 10.4 percent decrease ($14.1 million) from 2023. As a result, the U.S. goods trade balance with Nepal shifted from a $71.5 million deficit in 2023 to a $0.4 million surplus in 2024.
Dr. Adhikari emphasized that, while the scale of Nepal’s exports to the U.S. is small, the tariff hike will not have a “huge impact” directly. However, he acknowledged both direct and indirect effects on Nepal’s economy due to the interconnected nature of global trade.
“The U.S. is the center of the world economy, and its policies affect everyone—foreign investment, aid, tourism, and trade,” Dr. Adhikari said. “Countries like China and India, facing higher tariffs, will see their economies impacted, which could indirectly affect Nepal since 66% of our trade is with India and a significant portion with China.”
He pointed out that the tariff disparity could create new opportunities for Nepal. “If we can strategically export goods and services that high-tariff countries like China and India would otherwise send to the U.S., it could be an opportunity,” he explained. He cited the example of Nepal’s palm oil exports to India, which surged when other countries restricted trade, allowing Nepal to import, repackage, and sell the product profitably. “Such opportunities may arise again, and we must be ready to seize them,” he added.
Nepali handicrafts and garments, already recognized in the U.S. market, could see increased demand if Nepal enhances its competitiveness. However, Dr. Adhikari stressed the need for strategic planning and government support to capitalize on this window of opportunity.
While the 10% tariff increase is modest compared to competitors, Dr. Adhikari acknowledged that it could still influence demand for Nepali products in the U.S. “It’s not an addictive effect, but there will be some impact,” he said. To counter this, Nepali businesses must tackle the challenge of reducing costs and boosting competitiveness. “High taxes mean higher prices, which reduce sales. The solution is mass production, advanced technology, and lower costs to maintain demand,” he advised.
He also urged Nepal to explore alternative markets beyond the U.S. and India, such as the European Union and Arab countries, where tariffs remain lower for certain goods. “We must always look for target markets globally,” he said.
Given Nepal’s low export share and reliance on small-scale industries, Dr. Adhikari downplayed concerns about a major employment crisis. “Our export-oriented industries don’t employ huge numbers, and 80–81% of our trade is with India and China. The impact on employment will be normal, not massive,” he noted.
Regarding the long-term effects of Trump’s tariff policy on Nepal-U.S. trade, Dr. Adhikari remained optimistic. “A 10% tariff isn’t a big deal if we use technology, improve labor capacity, and ensure quality raw materials. It can be offset by branding our products—like Mount Everest water or Himalayan herbs—and selling them at a premium,” he said. He emphasized that Nepal’s unique offerings, rooted in its geography and heritage, could command higher prices globally if marketed effectively.
However, he warned that failure to adapt could stagnate Nepal’s economy. “If we don’t increase competitiveness or find alternatives, our export growth will stall, and the trade deficit will worsen,” he cautioned.
Dr. Adhikari urged collaboration between the government, industry, and experts to boost Nepali products, particularly in agriculture and minerals. “We need to mechanize agriculture, use skilled manpower, and reduce risks for farmers by ensuring market access,” he said. He also advocated for reducing production costs, scaling up output to meet global demand, and promoting Nepal’s brand identity worldwide.
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Suraj Ghimire
View More PostsSuraj Ghimire is a Nepali journalist and the online editor of Khasokhas. He focuses on political, social, migration, and international issues. He has also worked with various national television networks.
