New Section 301 tariffs up to 15% will apply to all non‑CAFTA‑DR‑origin Nicaraguan imports, phased in 2026–2028 and stacking with existing duties.

Title: Section 301 Tariff Action on Nicaragua – New Duties on Non‑CAFTA‑DR-Origin Imports

1. What changed

• USTR has completed a Section 301 investigation into Nicaragua’s acts, policies, and practices related to labor rights, human rights, fundamental freedoms, and the rule of law.
• As a result, the U.S. Trade Representative determined that these practices are “unreasonable” and burden or restrict U.S. commerce under Section 301(b) of the Trade Act of 1974.
• USTR has decided to impose a new ad valorem tariff, phased in over two years, on all imported Nicaraguan goods that are NOT originating under the Dominican Republic–Central America–United States Free Trade Agreement (CAFTA‑DR).
• This is a broad, country-based Section 301 measure: it applies across all HTS chapters to Nicaraguan-origin goods that fail CAFTA‑DR origin rules. CAFTA‑DR-originating goods are excluded from this specific action.
• USTR will issue a separate implementation notice under Section 305(a) of the Trade Act to specify operational details (likely including Chapter 99 provisions, HTS coverage, and any exclusions or procedures).

2. Affected products

• Scope: “All imported Nicaraguan goods that are not originating under CAFTA‑DR.” This is origin- and preference-based, not sector-specific.
• Includes all HTS chapters for goods of Nicaragua, such as (non-exhaustive examples):
• Textiles and apparel (e.g., HTS Chapters 61–63)
• Agricultural products (e.g., coffee, beef, rice, cacao, cassava flour; HTS Chapters 2, 9, 10, 18, 19)
• Cigars and tobacco (HTS Chapter 24)
• Furniture and wood products (HTS Chapters 44, 94)
• Medical devices and other industrial goods (various chapters, e.g., 90, 84, 85)
• Seafood and horticultural products (HTS Chapters 3, 6, 7, 8)
• Excluded from this specific Section 301 tariff: Nicaraguan goods that qualify as “originating” under CAFTA‑DR rules of origin and are entered under CAFTA‑DR preference.
• However, these goods may still be subject to other existing duties or measures (e.g., MFN rates, any other applicable trade remedies).

3. Rate changes

• New Section 301 tariff schedule for non‑CAFTA‑DR-origin Nicaraguan goods:
• January 1, 2026: 0% additional duty (tariff line established but rate set at 0%).
• January 1, 2027: 10% additional ad valorem duty.
• January 1, 2028: 15% additional ad valorem duty (fully phased-in rate).
• Application basis:
• Applies to products “entered for consumption, or withdrawn from warehouse for consumption, on or after January 1” of the corresponding year.
• Stacking with other duties:
• USTR explicitly notes that “any tariff would stack with others such as the existing 18 percent Reciprocal Tariff.”
• Practically, total duty on affected Nicaraguan goods may be: MFN rate + existing special/reciprocal tariffs + ADD/CVD (if any) + new Section 301 rate (10% or 15% once in effect).
• Potential for modification:
• USTR states that if Nicaragua shows a lack of progress in addressing the underlying labor/human rights/rule-of-law issues, “this timeline and these rates may be modified.”
• This leaves open the possibility of higher rates, faster implementation, or broader measures (e.g., CAFTA‑DR benefit suspensions) in future actions.

4. Key dates

• Investigation and determination milestones (for context):
• December 10, 2024: USTR initiated the Section 301 investigation on Nicaragua (89 FR 101088).
• January 16, 2025: Public hearing held; over 160 comments received.
• October 20, 2025: USTR issued the Section 301 Report and determined Nicaragua’s acts are unreasonable and burden/restrict U.S. commerce.
• October 23, 2025: Federal Register notice (90 FR 48511) proposed potential actions (including up to 100% tariffs and CAFTA‑DR benefit suspensions) and sought comments.
• December 10, 2025: Notice of Action issued, finalizing the phased tariff approach.

• Tariff implementation dates:
• January 1, 2026:
• New Section 301 measure becomes applicable to all non‑CAFTA‑DR-origin Nicaraguan goods entered for consumption or withdrawn from warehouse for consumption on or after this date.
• Additional duty rate: 0% (administrative start; no incremental duty yet, but likely new Chapter 99 reporting requirement once the implementation notice is issued).
• January 1, 2027:
• Additional Section 301 duty increases to 10% ad valorem on covered Nicaraguan goods.
• January 1, 2028:
• Additional Section 301 duty increases to 15% ad valorem on covered Nicaraguan goods (full phase-in).

• Future notice:
• Pursuant to Section 305(a) (19 U.S.C. 2415(a)(1)), USTR will issue a subsequent implementation notice. That notice will:
• Provide operational instructions for CBP and filers.
• Likely establish specific Chapter 99 HTS numbers for the Section 301 duties.
• Clarify any product- or program-specific nuances.

5. Required actions for importers, brokers, and compliance teams

A. Origin and CAFTA‑DR eligibility review

• Determine whether your Nicaraguan-sourced products qualify as “originating” under CAFTA‑DR:
• Review CAFTA‑DR rules of origin for each HTS classification.
• Confirm that production and regional value content requirements are met.
• Ensure documentation (e.g., CAFTA‑DR certifications, producer/supplier declarations, bills of materials) is robust and auditable.
• For goods that do NOT qualify as CAFTA‑DR-originating:
• Treat them as subject to the new Section 301 tariff schedule starting with entries on or after January 1, 2026 (0% initially, then 10%/15%).
• Plan for the additional duty cost from 2027 onward.

B. HTS classification and systems updates

• Once USTR issues the implementation notice:
• Update internal classification databases and broker instructions to include the new Chapter 99 Section 301 tariff lines for Nicaragua.
• Ensure entry filing logic applies the Chapter 99 code only to Nicaraguan-origin goods that are not entered under CAFTA‑DR preference.
• Validate that country-of-origin determinations for Nicaraguan goods are accurate and consistent with CBP rules (substantial transformation, etc.).

C. Financial and supply chain planning

• Cost modeling:
• Quantify the impact of a 10% (2027) and 15% (2028) additional duty on all non‑CAFTA‑DR-origin Nicaraguan imports.
• Consider cumulative effect with the existing 18% Reciprocal Tariff and any other applicable duties.
• Sourcing strategy:
• USTR explicitly expects the two-year phase-in to “provide companies with the time to shift operations to other CAFTA‑DR countries.”
• Evaluate alternative sourcing within the CAFTA‑DR region (e.g., Costa Rica, Honduras, El Salvador, Guatemala, Dominican Republic) or other countries.
• For operations in Nicaragua, assess feasibility of restructuring production to meet CAFTA‑DR origin rules and preserve preferential treatment.

D. Entry and documentation practices

• From January 1, 2026:
• Ensure brokers are aware that a new Section 301 measure applies to Nicaraguan goods and that they must follow the forthcoming CBP guidance.
• Even at 0%, there may be a requirement to declare a Chapter 99 code for tracking.
• From January 1, 2027 and January 1, 2028:
• Confirm that entries for non‑CAFTA‑DR-origin Nicaraguan goods reflect the correct additional duty rate (10% then 15%).
• Maintain documentation supporting CAFTA‑DR claims to avoid misapplication of Section 301 duties.

E. Risk management and monitoring

• Monitor for:
• The Section 305 implementation notice from USTR and corresponding CBP guidance (CSMS messages, Cargo Systems updates).
• Any subsequent USTR actions that could:
• Increase rates above 15%,
• Accelerate the phase-in, or
• Suspend/withdraw CAFTA‑DR benefits for Nicaragua.
• Review contracts with Nicaraguan suppliers and customers:
• Address who bears responsibility for new or increased duties (duty escalation clauses, Incoterms, price adjustments).

F. Internal communication and training

• Brief procurement, finance, and logistics teams on:
• The timing and magnitude of the new tariffs.
• The importance of CAFTA‑DR origin qualification.
• Train customs and brokerage staff on:
• Correct use of new Chapter 99 codes once published.
• Distinguishing CAFTA‑DR-origin vs. non-origin Nicaraguan goods at entry.

6. References and source documents

• USTR Press Release: “USTR Section 301 Action on Nicaragua’s Acts, Policies, and Practices Relating to Labor Rights, Human Rights and Fundamental Freedoms, and the Rule of Law” (December 2025).
• https://ustr.gov (navigate to Press Releases, 2025, Nicaragua Section 301 action)

• Federal Register Notice – Notice of Action (Section 301 – Nicaragua):
• PDF: https://ustr.gov/sites/default/files/files/Press/Releases/2025/Nicaragua%20Section%20301%20Notice%20of%20Action%20FRN%2012-10-2025%20Signed.pdf

• Section 301 Investigation Report on Nicaragua’s Acts, Policies, and Practices Related to Labor Rights, Human Rights and Fundamental Freedoms, and the Rule of Law (October 20, 2025):
• PDF: https://ustr.gov/sites/default/files/files/Press/Releases/2025/Nicaragua%20Section%20301%20Report_0.pdf

• Earlier Federal Register notices (for background):
• Initiation of Investigation (89 FR 101088, December 13, 2024).
• Determination and Proposed Actions (90 FR 48511, October 23, 2025).

Next steps for compliance teams:

• Immediately: Map all Nicaraguan-sourced SKUs, confirm HTS and CAFTA‑DR origin status, and begin cost/sourcing analysis.
• By mid-2025: Prepare systems and broker instructions to accommodate new Chapter 99 codes once published.
• By late 2026: Ensure readiness for the 10% rate effective January 1, 2027, and plan for the 15% rate in 2028, including any necessary sourcing shifts or pricing adjustments.