Following an investigation initiated in December 2024, the Office of the United States Trade Representative (USTR) issued a formal determination under Section 301 of the Trade Act of 1974. A report published by USTR pursuant to the investigation found that the Nicaraguan government’s systematic repression of dissent, misuse of laws to target civil society, and broader violations of labor and human rights burden US commerce.
The determination recommends several measures in response to the findings, including:
- Suspension of Dominican Republic-Central America-United States Free Trade Agreement (CAFTA-DR) benefits to Nicaragua, including tariff concessions
- Imposition of tariffs up to 100% on some or all Nicaraguan imports
The determination indicates such measures may be imposed immediately or phased in over a 12-month period.
Public comments on the proposed trade measures are being accepted through November 19, 2025. This comment period provides an opportunity for stakeholders, including businesses with supply chain exposure in Nicaragua, to weigh in on the potential impact of the suggested actions. In particular, commenters are invited to address whether the proposed measures would be effective in eliminating the alleged practices and whether they would cause disproportionate economic harm to US interests.
The investigation underscores the growing importance of Section 301 as a tool to advance the Administration’s trade strategy. President Trump recently relied on Section 301 to initiate an investigation into certain practices in Brazil, including alleged censorship of US citizens and companies. Moreover, in September, the Court of Appeals for the Federal Circuit affirmed that Section 301 gives the USTR broad authority to modify existing duties.
While the scope of the proposed measures has not yet been finalized, companies operating in or sourcing from Nicaragua should begin assessing potential risks and preparing for possible disruptions.
