The Office of the United States Trade Representative (USTR) determined this Monday that the policies and practices of the regime of Daniel Ortega and Rosario Murillo are “unreasonable” and represent “a burden or restriction on American trade.” The decision, adopted under Section 301 of the Trade Act of 1974, opens the possibility of imposing wide-ranging economic sanctions against Nicaragua, including its eventual suspension of the CAFTA-DR free trade agreement, vital for the economy of the Central American country, whose main trading partner is Washington. But it also proposes the application of tariffs of up to 100% on Nicaraguan exports.
The USTR report concludes that labor rights abuses, human rights violations, and the dismantling of the rule of law in Nicaragua “constitute a burden on U.S. commerce” and are, therefore, “actionable“, that is, susceptible to unilateral response measures. “Section 301 authorizes the Trade Representative to take all appropriate and feasible actions, subject to the direction of the president, to achieve the elimination of said acts, policies and practices,” specifies the resolution published in the official gazette of the State, the Federal Register.
The document submitted to public consultation proposes four alternatives: suspending all of Nicaragua’s benefits under CAFTA-DR, partially limiting those advantages, imposing tariffs of up to 100% on all imports or applying them selectively by sector. The consultation process will remain open until November 19, 2025, before Washington makes a final decision, or in short before President Donald Trump decides which option to choose.
Sources close to Washington’s trade environment assured EL PAÍS that the United States has already held tariff negotiations with the Central American countries of the treaty in recent weeks without the participation of Nicaragua, which could anticipate a progressive isolation of the country within the bloc.
The USTR’s determination puts an end to an investigation that began in December 2024, during the final stretch of Joe Biden’s administration, which collected more than 160 testimonies and public comments. Part of that information was sent to the State Department because it included evidence of serious human rights violations.
During a visit to Costa Rica at the beginning of this year, the Secretary of State, Marco Rubio, had already announced that the White House kept “on the table” the possibility of removing Nicaragua from CAFTA-DR, an agreement “designed to reward democracy.” On that occasion, Rubio stated that Washington is studying “what role Nicaragua should play within a treaty that cannot benefit a dictatorship,” and described the regimes of Ortega, Nicolás Maduro and Miguel Díaz-Canel as “enemies of humanity.”
Serious economic consequences
The United States is Nicaragua’s main trading partner and concentrates about 55% of its exports, mainly textiles, coffee, sugar, meat and tobacco. The benefits of CAFTA-DR have been essential to sustain the country’s economy since its entry into force in 2006.
“If Washington applies any of these measures, Nicaragua will face an immediate contraction of its trade balance and a severe blow to formal employment,” explains an economist consulted by EL PAÍS.
Beyond the economic implications, the USTR resolution represents a hardening of Washington’s approach towards Managua, by transferring pressure from the diplomatic and human rights arena to the field of international trade.
“The Government of Nicaragua engages in unjustifiable, unreasonable and discriminatory practices that represent a burden on US commerce,” the report states. In the words of the trade office itself, the actions of the Ortega and Murillo regime “not only violate fundamental rights, but also undermine fair competition and destabilize the Central American region.”
