The United States Trade Representative (USTR) published a new trade action under Section 301 targeting Nicaragua’s acts, policies, and practices related to labor rights, human rights, fundamental freedoms, and the rule of law. The December 10, 2025, report concludes that Nicaragua’s trade practices are unreasonable and burden or restrict U.S. commerce.
Effective January 1, 2026, a phased tariff structure will be applied to all Nicaraguan goods that do not qualify as originating under CAFTA-DR, creating immediate compliance considerations for U.S. importers, manufacturers, and supply chain planners.
HOW WILL THE NEW SECTION 301 TARIFF STRUCTURE APPLY TO NICARAGUAN GOODS?
Public comments emphasized the importance of maintaining operational continuity across integrated Central American production networks. A two-year phase-in allows importers and manufacturers to adjust sourcing, diversify production within the CAFTA-DR region, or strengthen origin-compliance programs without dramatic supply-chain disruption.
Phased Section 301 Nicaraguan-origin tariff schedule:
- 2026: 0 percent
- 2027: 10 percent
- 2028: 15 percent
CAFTA-DR-originating goods are not subject to these additional Section 301 tariffs.
WHICH NICARAGUAN PRODUCTS ARE IMPACTED BY THE NEW DUTIES?
All Nicaraguan products, including those in agriculture, textiles, apparel, manufactured goods, and consumer products, may fall within the scope unless they meet CAFTA-DR rules of origin. The Federal Register notice confirms that broad application was chosen over targeted duties after reviewing more than 2,000 public comments on potential disruptions, origin verification, and the feasibility of phased implementation. The USTR did not publish a product-level tariff list because the rate applies uniformly across all non-originating Nicaraguan goods.
HOW SHOULD LOGISTICS AND SUPPLY-CHAIN TEAMS PREPARE FOR THESE NEW TARIFFS?
Compliance teams should review origin documentation for all Nicaraguan shipments to determine CAFTA-DR qualification. Production and sourcing leaders may need to evaluate alternative suppliers or relocate operations within the CAFTA-DR region to maintain preferential duty treatment. Importers should anticipate potential adjustments to tariff timelines if Nicaragua fails to demonstrate progress, as USTR noted that modifications remain possible based on future conditions.
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