On December 10, after an unprecedented year-long investigation, the United States Trade Representative issued one of the most consequential decisions on Central America since the implementation of the regional free trade agreement two decades ago. Given the Donald Trump administration’s renewed focus on the Western Hemisphere, channeled through its “Trump corollary” to the Monroe Doctrine, the new tariff announcement on Nicaragua will link trade to rule of law and human rights, having direct effects on regional migration, prosperity, and diplomacy. 

Here’s the context: on October 20, the USTR concluded the Section 301 investigation on Nicaragua, which started under the previous Joe Biden administration. It focused on violations of labor, human rights, fundamental freedoms, and the rule of law, and concluded that the Nicaraguan government’s behavior imposes a burden on US commerce. Washington will now respond with phased tariffs on Nicaraguan exports that do not qualify under the Dominican Republic-Central America-United States Free Trade Agreement (CAFTA-DR) origin. This is the first time in CAFTA-DR’s history that the United States applied Section 301 to a fellow FTA partner based primarily on such violations.

For non-trade wonks, Section 301 of the 1974 Trade Act is the United States’ broad, unilateral authority to retaliate against “unjustifiable, unreasonable, or discriminatory” foreign practices. It is the same legal justification for the tariff escalation against China in 2018 under the first Trump administration, and it is still used today. Deployed against Nicaragua over humanitarian concerns, this investigation has created a precedent for tying US market access to the rule of law and democracy in the Western Hemisphere.

This case stood out for three reasons. First, human and labor rights were front and center, as the investigation documented the dismantling of independent unions, expropriation, the shutdown of NGOs, universities, press, and even Catholic institutions. It treated these violations as competition distortions that burden US commerce, trade, and democracy. Second, it targeted a modest and regionally integrated US-export dependent economy, as more than half of........

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