The Office of the US Trade Representative (USTR) has announced targeted action under Section 301 of the Trade Act of 1974 in response to Nicaragua’s ongoing labor rights abuses, human rights violations, and dismantling of the rule of law. USTR has determined that these acts, policies, and practices are unreasonable and burden or restrict US commerce.
This announcement follows an extensive review process that included more than 2,000 public comments, government agency consultations, and expert input. The findings reinforce the concerns first outlined in USTR’s 2024–2025 investigation, which documented significant human rights abuses and rule-of-law violations.
Effective January 1, 2026, the United States will implement a phased-in tariff on all Nicaraguan imports that are not originating under the Dominican Republic–Central America–United States Free Trade Agreement (CAFTA-DR).
- The tariff will begin at 0% in 2026
- Increase to 10% on January 1, 2027
- Rise to 15% on January 1, 2028
This tariff will apply in addition to existing duties, including the current 18% reciprocal tariff. USTR also noted that this timeline and the tariff rates may be adjusted if Nicaragua fails to demonstrate progress in addressing the underlying issues. A subsequent notice will be issued under Section 305(a) of the Trade Act to formally implement these measures.
Mohawk Global will continue to monitor developments related to this Section 301 action and any potential trade impacts that could affect US importers and exporters. If you have questions on how this impacts your business, reach out.
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