USTR Issues Section 301 Tariff Action on Nicaragua Starting Jan. 1, 2026
Trade Update • December 11, 2026
Key Points:
- The U.S. Trade Representative (USTR) has initiated Section 301 actions against Nicaragua over labor rights, human rights, fundamental freedoms, and the rule of law.
- Effective January 1, 2026, the U.S. will impose phased-in tariffs on Nicaraguan goods not originating under CAFTA-DR.
- The tariff schedule is 0% in 2026, 10% in 2027, and 15% in 2028.
- Section 301 tariffs will stack with other trade remedies, including the existing 18% Reciprocal Tariff.
- The timeline and rates may change depending on Nicaragua’s progress in addressing the issues.
- Section 301 allows the USTR to address unfair, unreasonable, or discriminatory foreign practices that burden U.S. commerce.
- The investigation included public comments, hearings, and expert consultations, totaling over 2,000 submissions.
- Gross human rights violations identified in the investigation have been referred to the U.S. Department of State.
- USTR will issue a subsequent notice to implement the tariff actions under Section 305(a) of the Trade Act.
- Importers should review CAFTA-DR eligibility, monitor the tariff schedule, and consult resources for compliance guidance.
he Office of the United States Trade Representative (USTR) has announced targeted action under Section 301 of the Trade Act of 1974 against Nicaragua due to concerns over labor rights, human rights, fundamental freedoms, and the dismantling of the rule of law.
Overview of Section 301 Actions
The USTR determined that Nicaragua’s acts, policies, and practices are unreasonable and burden or restrict U.S. commerce. This determination follows consultation with government agency experts, USTR cleared advisors, and review of over 2,000 public comments.
Effective January 1, 2026, the United States will impose phased-in tariffs on all imported Nicaraguan goods that are not originating under the Dominican Republic-Central America-United States Free Trade Agreement (CAFTA-DR).
Tariff Schedule
January 1, 2026: 0%
January 1, 2027: 10%
January 1, 2028: 15%
These Section 301 tariffs will be applied in addition to existing trade remedies, including the current 18% Reciprocal Tariff. The timeline and rates may change depending on Nicaragua’s progress in addressing these issues.
For additional details, see the Federal Register publication.
Scope of the Investigation
On December 10, 2024, the USTR initiated an investigation into Nicaragua’s acts, policies, and practices concerning:
Labor rights
Human rights and fundamental freedoms
The rule of law
USTR provided opportunities for public input, including a public comment process and public hearing, receiving more than 160 witness testimonies and rebuttal comments. Some testimonies indicated gross violations of human rights, which USTR referred to the U.S. Department of State for further investigation and advocacy.
On October 20, 2025, the USTR determined that Nicaragua’s acts are unreasonable and actionable under Section 301(b)(1) of the Trade Act. Over 2,000 written public comments were reviewed during the responsive action proposal period.
What Importers Need to Do
Importers of Nicaraguan goods should:
Review product eligibility under CAFTA-DR to determine whether goods qualify for tariff exemption.
Monitor phased-in tariff schedule to plan for increased costs in 2027 and 2028.
Consult the Federal Register notice and USTR Report for detailed guidance on Section 301 actions.
Reach out to customs brokers or legal advisors for compliance and reporting requirements.
GHY’s team is available to provide guidance and answer questions regarding these new tariffs and their implications for U.S. imports.
Process and Next Steps
Pursuant to Section 305(a) of the Trade Act (19 U.S.C. 2415(a)(1)), USTR will issue a subsequent notice to implement these tariffs.
The phased-in tariffs aim to balance the need for U.S. action while limiting disruption for U.S. businesses. The timeline and rates may be adjusted depending on Nicaragua’s progress in addressing labor and human rights issues.
How GHY Can Help?
GHY specializes in helping businesses navigate and reduce the impacts of tariffs through strategic solutions tailored to their needs. Our experts can audit your supply chain to identify inefficiencies, uncover cost-saving opportunities, and ensure compliance with evolving trade regulations. We also employ tariff engineering techniques to optimize product classification and sourcing strategies, minimizing duty exposure and maximizing profitability.
By partnering with GHY, your business gains access to the tools and expertise needed to streamline operations and stay competitive in a challenging trade environment.
Contact Us Today! Booking a Meeting, email consult@ghy.com, or call +1 (800) 667-0771.
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