The reactivation of U.S. trade policy under the new Trump administration has created a scenario of uncertainty for Latin America. Measures such as reciprocal tariffs, the review of preferential agreements, and the use of Section 301 of the Trade Act of 1974 are reshaping bilateral relations in the region. In this situation, Costa Rica and Nicaragua reflect opposing responses to the same context: while the former seeks to maintain its preferential access to the U.S. market through cooperation and technical dialogue, the latter faces potential trade sanctions for alleged labor and human rights violations.
1. What are the main measures that the Trump Administration has implemented?
Since his return, Trump has promoted a trade strategy based on tariff reciprocity and national security. Among his most significant actions are: (i) the application of reciprocal tariffs that level the playing field with his trading partners; (ii) the review of preferential agreements such as CAFTA-DR and the USMCA, to maintain benefits only for countries aligned with U.S. interests; and (iii) the reactivation of investigations under Section 301, used to impose sanctions for practices considered unjustifiable or related to non-compliance with labor, human rights, or security cooperation.
2. What has Costa Rica's strategy been in response to the new US measures?
Costa Rica has adopted a proactive and cooperative strategy, highlighting its commitment to free trade and transparency. In response to the reciprocal tariffs, the government undertook diplomatic and technical efforts with the USTR to demonstrate the openness of its tariff structure. As a result, it is negotiating its exclusion from tariff increases and thus maintaining a 0% tariff on most of its exports. This stance strengthens its image as a reliable and technically sound partner and demonstrates the importance of maintaining coherent trade policies aligned with international standards.
3. What measures has the U.S. taken against Nicaragua and what are their implications?
In contrast, a USTR investigation under Section 301 concluded that Nicaragua's labor and human rights policies violate its CAFTA-DR commitments. Therefore, it recommended the partial suspension of tariff preferences and an increase in import duties. These measures would impact key sectors such as textiles, tobacco, sugar, and agro-industrial products, which depend on preferential access to the U.S. market to maintain their competitiveness.
4. What can the region learn from these two cases?
The contrast between Costa Rica and Nicaragua shows that, currently, institutional coherence and technical cooperation are key in the relationship with the U.S. While Costa Rica consolidates its image as a reliable partner, Nicaragua faces sanctions that limit its competitiveness. Both cases demonstrate that Latin America must strengthen its trade institutions, move toward greater regulatory convergence and transparency, and deepen regional cooperation to maintain and expand.
its presence in the US market.
By: Amena Maestre, Junior Consultant – Trade Policy and Defense to Legal AffairsLatin America and US measures: Costa Rica and Nicaragua
