Trump Administration Threatens 100 Percent Tariffs on All Nicaraguan Products

Citing a variety of alleged human rights abuses, the Office of the U.S. Trade Representative (USTR) is threatening Nicaragua with a variety of trade-related sanctions, including a 100 percent tariff rate on all products from Nicaragua, which is the largest exporter of handmade cigars to the U.S.

On Monday, Oct. 20, the USTR announced that it is seeking public comments on a variety of allegations and proposed remedies, the most conseuqential of which would be an immediate tariff of 100 percent on all Nicaraguan goods and suspending Nicaragua’s rights of Dominican Republic-Central America-United States Free Trade Agreement (CAFTA-DR), a key free trade agreement between the U.S. and Latin American countries, including Nicaragua.

The CAFTA-DR threat is not new. The Biden administration investigated potential violations by Nicaragua’s key textile industry, specifically whether the use of forced or child labor created prices that U.S. businesses could not compete with. Most notably, Milliken & Company—one of the largest textile companies in the world—accused a Chinese-owned company in Nicaragua of using cotton from Xinjiang, a sparsely populated region in northwest China that includes a large Uyghur population. The Chinese government’s treatment of the Uyghur people, who are Muslim, has been widely criticized.

Today’s 46-page report includes some of those accusations, but goes further, accusing Nicaragua’s Ortega-Murillo government of “gross violations of human rights” including attempted assassinations, extrajudicial killings, the revoking of citizenship, torture, forced exile, human trafficking and more. The USTR says that because of the sensitive nature of some allegations, it has sent some evidence to the U.S. State Department for further investigation.

To critics of the Ortega-Murillo regime, none of these allegations will be new.

In 2018, after the government announced cuts to the country’s pension system, widespread protests took place throughout the country. The government responded with force, oftentimes using paramilitary forces to quell the protests. Since then, the government has become significantly more aggressive towards any opposition, real or perceived. This has included a wide range of actions, ranging from kicking out foreign journalists to accusations that it has removed citizens from the government’s citizenship registry.

The USTR report has explicitly recommended four potential outcomes; quoting the report:

1. Suspend the application of all Dominican Republic-Central America-United States Free Trade Agreement (CAFTA-DR) benefits to Nicaragua, including tariff concessions and cumulation of Nicaraguan content for other CAFTA-DR partners, immediately or phased in over a period of time up to 12 months.
2. Suspend the application of some CAFTA-DR benefits to Nicaragua, including tariff concessions and cumulation of Nicaraguan content for other CAFTA-DR partners, immediately or phased in over a period of time up to 12 months.
3. Apply tariffs up to 100 percent on all Nicaraguan imports, immediately or phased in over a period of up to 12 months.
4. Apply tariffs up to 100 percent on some Nicaraguan imports immediately, with tariffs for selected sectors phased in over a period of time up to 12 months.

The report does not mention cigars specifically, though it does mention potential child labor in the tobacco sector:

According to the U.S. Department of Labor (DOL), child labor in Nicaragua is most prominent in the agriculture sector, including raising livestock, and in the production of bananas, coffee, and tobacco.

Nicaragua is the largest exporter of handmade cigars to the U.S. Currently, those cigars have a tariff rate of 18 percent.

The comment period is open and currently runs through Nov. 19, 2025.