Skip to main content
December 12th
Search
Search ONESOURCE Global Trade Support Help and Support.

This article applies to:

  • Product: ONESOURCE Global Trade

USTR imposes Section 301 tariffs on Nicaraguan goods

The U.S. Trade Representative (USTR) has recently announced a significant action regarding imports from Nicaragua, which warrants close attention for any business engaged in trade with the region.
This action stems from an investigation initiated on December 10, 2024, by the USTR into Nicaragua's policies and practices concerning labor rights, human rights, fundamental freedoms, and the rule of law. After a thorough review, including public comments and consultations, the USTR concluded that Nicaragua's actions are unreasonable, burden U.S. commerce, and are therefore actionable under Section 301(b) of the Trade Act of 1974.

Phased-in tariffs on non-CAFTA-DR Nicaraguan goods

The most critical development for trade compliance professionals is the imposition of a phased-in tariff on all imported Nicaraguan goods that do not originate under the Dominican Republic-Central America-United States Free Trade Agreement (CAFTA-DR). The tariff schedule will be phased in as follows:
  • January 1, 2026:
     0% tariff
  • January 1, 2027:
     Increase to 10% tariff
  • January 1, 2028:
     Increase to 15% tariff

Why this action?

The USTR determined that Nicaragua's acts, policies, and practices are fundamentally unfair, inconsistent with international norms and Nicaragua's own laws, and undermine regional and international labor and human rights conventions. These actions, it was found, restrict U.S. commerce by creating unfair competition (through artificially low-cost products due to denied labor rights) and harming U.S. businesses and workers by creating a high-risk environment for investment and leading to lost opportunities.
Understanding the scope and implications
  • Targeted approach:
     The decision to apply tariffs specifically to goods
    not
     originating under CAFTA-DR is a calculated move. This aims to minimize disruption to U.S. exports to Nicaragua and U.S. companies operating there, while still exerting pressure on Nicaragua to address its practices.
  • Two-year phase-in:
     The gradual increase of the tariff over two years is intended to give companies time to adjust their supply chains and operations, potentially shifting production to other CAFTA-DR countries if necessary.
  • Monitoring and future action:
     The USTR will continue to monitor the effectiveness of these trade actions and Nicaragua's progress. They explicitly state that if additional leverage is needed, further action may be considered.

What this means for trade compliance professionals

  1. HS code review:
     Immediately begin identifying all imported goods from Nicaragua and verify their Harmonized System (HS) codes.
  2. Origin verification:
     Crucially, determine the
    origin
     of these goods. If they claim CAFTA-DR origin, ensure all necessary documentation and proofs of origin are meticulously maintained to avoid the new tariffs. For goods not originating under CAFTA-DR, be prepared for the impending tariff increases.
  3. Supply chain assessment:
     Conduct a thorough review of your supply chains. If you source products from Nicaragua that will be subject to these new tariffs, evaluate the financial impact and explore alternative sourcing options or adjustments to your pricing strategies.
  4. Cost analysis:
     Factor in the projected tariff increases for 2027 and 2028 into your landed cost calculations for Nicaraguan imports.
  5. Documentation vigilance:
     Maintain robust record-keeping for all Nicaraguan imports, especially concerning origin, to ensure compliance and prevent potential penalties.
  6. Stay informed:
     Continue to monitor announcements from the USTR and other relevant government bodies for any updates, clarifications, or further actions related to this trade measure.
This new tariff regime represents a significant shift in trade relations with Nicaragua. Proactive assessment and adaptation are essential for compliance professionals to mitigate risks and ensure continued smooth operations in this evolving global trade landscape. Although the tariffs are still a year away, given the volatility of the current tariff landscape, it is best for companies to conduct reviews now and prepare for the potential impact.
For more information on how ONESOURCE Global Trade solutions can assist you in managing supply chain risk and regulatory compliance as we move into 2026, contact your Account Manager or Client Success Manager.