U.S. Ranks First Among Non-Neighboring Countries for Nepal’s Exports, Trade Deficit Persists

The United States isn’t Nepal’s most significant trading partner outside its immediate neighbors, but it is a key one. According to data from Nepal’s Customs Department for the fiscal year 2023/24, the U.S. was Nepal’s second-largest export destination and tenth-largest import source.

Nepal’s exports to the U.S. were valued at NPR 11.08 billion ($83.1 million), representing a significant decrease from the previous year. This figure accounted for 7.6% of Nepal’s total exports of NPR 145.8 billion. Major export items included handicrafts, textiles (like carpets and pashmina), and agricultural products, showcasing the diversity of Nepal’s exports to this important market.

Nepal’s imports from the U.S. were valued at NPR 11.53 billion ($86.4 million), which made up 0.9% of Nepal’s total imports of NPR 1,281.3 billion. The U.S. ranked as Nepal’s tenth-largest import source, trailing India, China, Argentina, the UAE, and Indonesia, among others.

The trade dynamic between the two nations resulted in a trade deficit for Nepal of NPR 0.45 billion ($3.3 million) with the U.S. during the fiscal year 2023/24. This is a very modest deficit, especially when compared to Nepal’s massive overall trade deficit of NPR 1,135.5 billion.

The U.S. government’s trade data for the calendar year 2023 paints a different picture. According to the Office of the U.S. Trade Representative (USTR), the U.S. had a goods trade deficit with Nepal of $71.5 million. This disparity in data likely stems from different reporting periods, methodologies, and currency conversions.

Nepal’s trade with the U.S. is significantly bolstered by the Nepal Trade Preference Programme (NTPP), which provides duty-free access for 66 product categories (not 77 as the text stated).

The program, which was extended in 2017, is set to expire by the end of 2025. This looming expiration raises concerns about potential tariffs, which could impose a 10% baseline duty on Nepali goods. The new tariffs could harm key labor-intensive exports like carpets and pashmina, which already face tough competition.

While India dominates Nepal’s trade with over 60% of both exports and imports, the U.S. remains a vital partner for diversifying Nepal’s trade and reducing its heavy reliance on a single market. Nepal’s overall trade profile is heavily skewed toward imports, with petroleum products, iron, steel, and machinery driving the large national trade deficit.