USTR Considers 301 Tariffs and Suspended CAFTA-DR Benefits for Nicaragua

Oct. 21, 2025
By: Austin J. Eighan

On Oct. 20, the Office of the U.S. Trade Representative (USTR) announced its determination that Nicaragua’s government engages in labor, human rights, and rule-of-law violations that are unreasonable and burden or restrict U.S. commerce. The findings stem from a 10-month investigation initiated under Section 301 of the Trade Act of 1974, as amended – a tool used to impose secondary tariffs on a majority of goods from China and currently considered for addressing alleged unfair trade practices in Brazil and China’s Maritime, Logistics, and Shipbuilding industries.

According to the USTR’s report, the Nicaraguan government has facilitated “increasingly pervasive abuses” of internationally recognized labor rights, fundamental human rights, and rule-of-law protections, which include:

• Suppressing independent unions, blocking collective bargaining rights;
• Using forced and child labor while permitting unsafe working conditions and human trafficking; and
• Arbitrarily imposing discriminatory customs actions and restrictions on foreign investment.

The USTR concluded that these practices qualify as “unreasonable” and consequently harm U.S. commerce as they unfairly and inequitably “inhibit and prohibit fair and market-oriented economic activity,” while running counter to basic human rights norms and principles “when judged against [] international standards as well [as those] that Nicaraguan society has adopted as part of its core values.”

The USTR will now consider whether it should suspend all or some of the benefits extended to Nicaragua under the Dominican Republic-Central America free trade agreement (CAFTA-DR), and/or apply Section 301 tariffs of up to 100% on all or some Nicaraguan goods. The USTR invites interested parties to submit written comments by November 19.

If your company has concerns about the impact of the determination or would like to file a comment, please reach out to one of our attorneys at Barnes, Richardson & Colburn.