On December 10^th, 2025 the US Trade Representative released the results of the Section 301 investigation initiated in December 2024 into Nicaragua’s alleged violations of labor rights, human rights and the rule of law protections. The investigation detailed extensive infringement of labor and human rights in addition to increasingly authoritative restrictions of individual freedoms and liberty. Significantly, the investigation discovered widespread child labor abuses including up to 47 percent of children between the ages of 10 and 14 being forced to perform hazardous work in the mining industry.

In light of these findings, the US Trade Representative has recommended a phased in approach for additional tariffs on goods from Nicaragua that do not qualify under the Dominican Republic-Central America-United States Free Trade Agreement (CAFTA-DR). While initial tariffs of up to 100% were proposed, the USTR settled on a phased in approach over three years. Additional tariffs will officially begin on January 1^st, 2026, although at zero percent and increase to 10 percent on January 1^st, 2027, and finally 15% on January 1^st, 2028. The tariffs would be in addition to any reciprocal tariffs applied under IEEPA and subject to modification depending on the response and willingness to address these violations by the government of Nicaragua.

The announcement by the USTR has been lauded by the American Apparel & Footwear Association (AAFA) for taking a balanced approach that holds partners accountable for labor practices while supporting the trade agreement bringing vital economic benefits to the United States. The government of Nicaragua has yet to comment on the announcement or propose any response to the issued identified by the USTR.