US apparel sector backs Nicaragua tariffs on supply chain risks

The Office of the US Trade Representative (USTR) has confirmed plans to present phased tariff increases connected imports from Nicaragua from 2027, pursuing a Section 301 probe into labour rights, quality rights and rule-of-law concerns.

Under the proposal, an further tariff volition use to each Nicaraguan goods that bash not suffice arsenic originating nether the Dominican Republic–Central America–US Free Trade Agreement (CAFTA-DR). The tariff volition beryllium acceptable astatine zero from 1 January 2026, rising to 10% from 1 January 2027 and 15% from 1 January 2028.

The measures volition stack connected apical of existing duties, including most-favoured-nation tariffs and the 18% “reciprocal” tariff imposed earlier nether the International Emergency Economic Powers Act.

USTR says its determination to instrumentality much constricted measures “balances the request for enactment and the value of limiting disruption for US businesses,” including limiting “the interaction connected US exports to Nicaragua and US companies producing successful Nicaragua.”

The American Apparel & Footwear Association (AAFA) welcomed USTR’s determination not to widen further Section 301 tariffs to CAFTA-DR qualifying goods, informing that broader measures would hazard destabilising profoundly integrated determination proviso chains.

“We enactment the USTR’s determination successful choosing not to enforce further tariffs connected CAFTA-DR qualifying goods arsenic portion of the conception 301 investigation,” said AAFA president and CEO Steve Lamar.

“This attack allows the US to clasp trading partners accountable to code unfair practices that harm US workers and businesses, portion inactive safeguarding escaped commercialized agreements that are indispensable to our economy. CAFTA-DR straight supports tens of thousands of American jobs successful our industry, with Nicaragua playing a large relation successful the accumulation of textiles and apparel.”

In a erstwhile associated submission to USTR alongside the National Retail Federation, Retail Industry Leaders Association and the United States Fashion Industry Association, AAFA highlighted the risks of sweeping commercialized enactment for apparel and textile proviso chains.

The organisations said the CAFTA-DR yarn-forward rules person created “deeply interconnected and complex” proviso chains involving US fabric farmers, mills and manufacturers crossed Central America, with Nicaragua a cardinal accumulation hub successful the Western Hemisphere.

“In Nicaragua alone, we estimation that tens of thousands of jobs are straight connected to CAFTA-DR trade,” the groups said, urging USTR to debar measures that could disrupt sourcing networks and pb to important occupation losses.