Costa Rica Urges U.S. Not to Impose 12.5% Tariffs

DailyEconomic

SAN JOSÉ — The Costa Rican government on Tuesday formally submitted comments to the U.S. Trade Representative’s office (USTR), urging that Costa Rica be excluded from the proposed 12.5% tariff measures in order to preserve the market access conditions agreed under the Dominican Republic–Central America Free Trade Agreement (CAFTA-DR).

The tariff proposal stems from a USTR investigation into the enforcement of import bans on goods produced with forced labor among 60 trading partners, which account for 99% of U.S. merchandise imports. On June 2, the USTR announced its intention to impose 12.5% tariffs on 46 economies, with Costa Rica included on the list. The investigation alleges that the 60 economies, including Costa Rica, have inadequately enforced bans on imports of forced labor products from third countries. For Costa Rica, the proposed 12.5% tariff is not an additional levy but would replace the current 10% interim tariff — which is set to expire on July 24.

Costa Rica’s Minister of Foreign Trade, Indiana Trejos, stated in a declaration: “Costa Rica is not here to replace U.S. production, but rather to strengthen it through safer, more diversified, and more competitive regional supply chains”. She emphasized that Costa Rican products “complement and strengthen U.S. production” and “form part of an integrated supply chain that helps enhance security, diversification, and competitiveness”.

The position of Costa Rica’s Ministry of Foreign Trade was developed in coordination with business chambers, industry associations, and enterprises. Trejos noted that the United States is Costa Rica’s largest trading partner, and that the proposed tariffs would jeopardize the market access conditions negotiated under the CAFTA-DR framework. The ministry stated that it would continue to maintain dialogue with the United States to defend the country’s commercial interests.

Under the USTR’s proposal, goods from CAFTA-DR member countries — including Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, and Nicaragua — would otherwise be eligible for duty-free treatment. However, the investigation’s findings placed Costa Rica on the list subject to the 12.5% tariff. Before a final decision is made, the proposal will go through a public comment period and hearing process. The final measures are expected to represent a continuation of current U.S. tariff policy.

Costa Rica’s move reflects the broader concerns of Central American countries amid tightening U.S. trade policy. As an important U.S. trading partner in Central America, Costa Rica hopes to leverage the legal and institutional advantages under the CAFTA-DR framework to avoid becoming a casualty of the new tariff measures.