Since January 1, 2026, Nicaraguan products that are not included in the list of those benefiting from DR-Cafta will begin to pay a tariff, which will increase over the following two years, announced the U.S. Trade Representative as part of Section 301 of the Trade Act of 1974.
Thus, the United States decided not to target products within DR-Cafta, nor suspend the country from the agreement, whether fully or partially, according to a statement issued this afternoon by the Office of the U.S. Trade Representative (USTR).
The measure was adopted in response to “Nicaragua’s actions, policies, and practices related to labor rights abuses, human rights violations, and fundamental freedoms, and the dismantling of the rule of law,” committed by the dictatorship of Daniel Ortega and Rosario Murillo.
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“Starting January 1, 2026, the United States will impose a tariff, which will gradually be implemented over two years on all Nicaraguan products imported that are not originating under the Dominican Republic-Central America-United States Free Trade Agreement (CAFTA-DR),” the statement says.
How Will the Tariff Be Set?
“The tariff will be set at zero percent on January 1, 2026, and will increase to 10 percent on January 1, 2027, and 15 percent on January 1, 2028. Any tariff will be added to others, such as the existing reciprocal tariff of 18 percent. Furthermore, if Nicaragua does not show progress in addressing these issues, this schedule and these rates may be adjusted,” according to the statement.
“This measure balances the need to act with the importance of limiting disruptions for U.S. companies. In accordance with Section 305(a) of the Trade Act (19 U.S.C. 2415(a)(1)), the USTR will issue a subsequent notice to implement this measure.”
The U.S. Government decided to adopt this measure, softer than expected, despite the USTR acknowledging that “it received testimonies from witnesses and more than 160 written comments and responses. The investigation also gathered testimonies that reveal serious human rights violations, which the USTR is referring to the U.S. Department of State for further investigation, action, and defense on these matters.”
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An International Monetary Fund (IMF) mission warned that the measures to be adopted will affect the Nicaraguan economy.
“There is much uncertainty regarding additional trade measures recommended by the U.S. Trade Representative for Nicaragua, whose decisions are not expected before the end of 2025 and would affect exports and economic activity,” it stated.
Abuses by the dictatorship affect U.S. trade
“On October 20, 2025, the U.S. Trade Representative determined that Nicaragua’s actions, policies, and practices regarding labor rights, human rights, fundamental freedoms, and the rule of law are unreasonable and hinder or restrict U.S. trade, making them subject to corrective measures under Section 301(b)(1) of the Trade Act,” said the U.S. in adopting the measure.
“The U.S. Trade Representative proposed a series of response measures and invited the public to submit written comments by November 19, 2025, on the proposed measures. The Office of the U.S. Trade Representative (USTR) received more than 2,000 written comments,” it added.
