On December 10, 2024, the U.S. Trade Representative (USTR) initiated a Section 301 investigation into Nicaragua’s labor rights, human rights, and rule-of-law practices. Following public comments, a January 16, 2025 hearing, and noting Nicaragua’s decision to decline to hold consultations regarding the investigation under the statutory framework, USTR published a formal report on October 20, 2025, detailing abuses under the Ortega-Murillo regime, including labor rights violations, repression of fundamental freedoms, and systematic dismantling of the rule of law. USTR determined these acts to be unreasonable, violate international norms and Nicaragua’s own laws, and burden or restrict U.S. commerce by creating unfair competition, discouraging U.S. investment, and causing lost investment and commercial opportunities.
In response to an October 23, 2025 notice seeking public comment on proposed actions, including possible suspension of CAFTA-DR benefits and tariffs up to 100%, USTR received 2,006 submissions. Comments were evenly divided between support and opposition. While many supported strong action, both supporters and opponents urged a calibrated approach to avoid disproportionate harm to U.S. sectors, small businesses, supply chains, and Nicaraguan workers. Numerous industries requested exclusions (e.g., textiles, apparel, cigars, coffee, furniture, medical devices, agricultural products).
On December 10, 2025, USTR announced its final action authorizing Section 301 tariffs on Nicaraguan products. The action imposes a phased-in tariff on all Nicaraguan goods not qualifying as originating under CAFTA-DR, set at 0% on January 1, 2026, increasing to 10% on January 1, 2027, and to 15% on January 1, 2028. Any applicable Section 301 tariff will apply in addition to existing duties, including the current 18% Reciprocal Tariff. This approach is intended to pressure Nicaragua to address the identified practices while limiting disruption to U.S. businesses, consumers, and supply chains. USTR will continue to monitor the impact of these measures and Nicaragua’s actions and may consider additional trade measures if further leverage is needed.
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