How EU, UK & Canadian buyers save import duty sourcing garments from Nepal

If you import knit garments — t-shirts, polos, jersey — into the EU, UK, or Canada, where you source them changes your landed cost before you’ve negotiated a single unit price. Sourcing from Nepal can mean 0% import duty, versus the standard rate you’d pay from most countries. Here’s exactly why, and the timeline every buyer should understand.

Why Nepal is duty-free (and China isn’t)

Nepal is classified as a Least Developed Country (LDC). Major economies grant LDCs preferential, usually zero, import duty to support their development — through the EU’s Everything But Arms (EBA) scheme, the UK’s Developing Countries Trading Scheme (DCTS), and Canada’s Least Developed Country Tariff (LDCT).

For a cotton knit t-shirt, the standard EU (MFN) import duty is roughly 12%. From Nepal under EBA, it’s 0%. The UK and Canada mirror that duty-free access for LDC-made garments.

The key: “single transformation” means imported fabric still qualifies

A common misconception is that using imported (e.g. Chinese) fabric disqualifies the duty-free origin. For LDC garments, it does not. The EU, UK, and Canada apply single-transformation rules of origin: cutting and sewing the garment in Nepal is enough for it to count as Nepal-made. Canada’s rule (updated January 2025) is the most generous — a garment “cut, sewn, or knit” in an LDC qualifies even with foreign fabric.

In practice, the factory supplies the origin proof — for the EU, a statement on origin on the invoice from a REX-registered exporter; for the UK, an origin declaration — and your goods clear at the preferential rate.

What about the United States?

Be clear-eyed here, because this is where a lot of sourcing content is misleading. The US does not offer duty-free access for knit tees and polos from Nepal. The Nepal Trade Preference Program expired on 31 December 2025 and has not been renewed; US GSP has been lapsed since 2020 and excludes apparel in any case. Nepali knitwear therefore enters at standard MFN duty — which on knit tops is substantial — plus whatever trade measures are current. US tariff policy has moved repeatedly through 2026, so confirm the live rate with your customs broker rather than trusting any published figure, including ours.

What the saving looks like on a real order

Take 2,000 hoodies at $8.00 ex-factory: a $16,000 order. From China into the UK, duty adds about $1,920; into Canada, $2,880. From Nepal, zero — the same garments land $1–1.50 per piece cheaper before any price negotiation happens. On knit programmes that repeat every season, this is the quiet line item that funds better fabric or better margin. The full cost anatomy of a hoodie.

Market-by-market detail lives in our country guides: the UK (paperwork lighter than you think), Canada (the biggest single gap at 18%), Japan, Germany, France, and the Netherlands.

The 2026 window — and why to plan now

Nepal is scheduled to graduate from LDC status in November 2026. The EU and UK grant a transition period keeping duty-free access to around 2029. After that, access likely shifts to standard GSP with stricter “double transformation” rules — under which imported fabric may no longer qualify. Translation: there’s a real window to lock in duty-free sourcing now, and a good manufacturing partner will help you plan for the transition.

Duty rates and rules of origin depend on your market and your product’s exact HS code, and LDC preferences change over time. Always confirm the current rule for your destination and product before you commit.

The bottom line for buyers

If your market is the EU, UK, or Canada, sourcing knit basics from Nepal can remove ~12% of duty from your landed cost, legitimately and with proper documentation. If it’s the US, the tariff picture has moved repeatedly through 2026 — our date-stamped US guide has the current state. Either way, it’s worth a conversation. See our full duty-free breakdown, or tell us your market and we’ll confirm exactly what applies to your program.