A major update has recently come down from the U.S. Trade Representative (USTR) that could impact a significant number of goods imported from Nicaragua. If you source goods from Nicaragua or have Nicaraguan suppliers, it’s crucial to understand these new tariffs and how they might affect your operations starting in 2026.
On December 10, 2025, the U.S. Trade Representative (USTR) announced new trade measures under Section 301 of the Trade Act of 1974, targeting Nicaragua due to concerns over labor rights abuses, human rights violations, and the deterioration of the rule of law in the country. After a year-long investigation and extensive public comment process, the U.S. has decided to impose a phased tariff increase on all Nicaraguan goods that do not fall under the Dominican Republic-Central America-United States Free Trade Agreement (CAFTA-DR).
This decision comes after USTR determined that Nicaragua’s actions, including the aforementioned violations, are “unreasonable and burden or restrict U.S. commerce.” The U.S. government is using Section 301, a tool designed to address foreign practices that unfairly restrict U.S. trade, to hold Nicaragua accountable and to pressure for change.
The Timeline and Phased Tariff Increases
Effective January 1, 2026, the new tariffs will go into effect, initially set at 0%. However, as the situation unfolds, the tariffs will gradually increase:
- January 1, 2026: 0% tariff
- January 1, 2027: 10% tariff
- January 1, 2028: 15% tariff
These tariffs are in addition to any existing tariffs, including the 18% Reciprocal Tariff currently in place. This means if you’re importing goods from Nicaragua that fall outside of CAFTA-DR provisions, your import costs are going to rise significantly over the next few
While the phased tariff increases are set in stone for the next few years, there’s room for adjustment depending on Nicaragua’s progress in addressing these human rights and labor violations. If the country makes substantial changes, USTR could modify the tariff timeline or rates accordingly.
However, if Nicaragua fails to show improvement, the U.S. could further increase tariffs or take additional trade actions. As a U.S. importer, this introduces some uncertainty, but it also means that the tariffs could be adjusted downward if there’s progress.
CAFTA-DR Exemption: Goods imported under CAFTA-DR will be exempt from these new tariffs. If you’re already using this trade agreement to benefit from duty-free or reduced duty rates, be sure to continue complying with the rules to take advantage of this exemption.
Link to USTR article:
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