HS Code:
Apparel goods from Nicaragua made of cotton or man-made fibers, subject to specific restraints as described in U.S. note 15(b) to the relevant subchapter, fall under special trade provisions with the United States. These goods are imported under quota limits set by U.S. note 15(c), often benefiting from preferential treatment under the Dominican Republic-Central America-United States Free Trade Agreement (CAFTA-DR). This category includes items such as shirts, trousers, and other clothing articles, with trade regulated to balance market access and domestic industry protection in the U.S. Nicaragua is a key supplier in this category due to its competitive labor costs and proximity to the U.S. market.
Total Trade Volume
Approximately $1.2 billion USD
Data from 2022
Source
U.S. International Trade Commission (USITC) and Office of Textiles and Apparel (OTEXA)
$1.1 billion USD
91.7% of total exports from Nicaragua in this category of total trade
Increasing
$50 million USD
4.2% of total exports from Nicaragua in this category of total trade
Stable
$30 million USD
2.5% of total exports from Nicaragua in this category of total trade
Increasing
Average Rate
0% under CAFTA-DR for qualifying goods
Highest Rate
Up to 16.5% for non-qualifying goods or over-quota imports (cotton apparel)
Lowest Rate
0% for goods meeting CAFTA-DR rules of origin
Increased demand for sustainable apparel
Nicaraguan exporters are investing in organic cotton and eco-friendly production to meet U.S. retailer demands, potentially increasing market share.
2021-2022
Nearshoring in apparel supply chains
U.S. companies are shifting sourcing from Asia to Central America, including Nicaragua, due to shorter lead times and trade benefits under CAFTA-DR.
2020-2022
Rising labor and production costs
While still competitive, increasing costs in Nicaragua may reduce price advantages compared to other low-cost producers if not offset by productivity gains.
2022
U.S. and Central American governments have discussed potential updates to CAFTA-DR to include more flexible rules of origin for apparel, benefiting Nicaraguan exporters.
Mid-2022
Could allow more Nicaraguan apparel to qualify for duty-free access, boosting exports.
The U.S. tightened monitoring of apparel imports under quota limits to ensure compliance with CAFTA-DR provisions, affecting some Nicaraguan shipments.
Early 2023
May lead to delays or additional compliance costs for exporters not meeting documentation standards.
Nicaragua announced new investments in textile manufacturing zones to increase production capacity and attract foreign direct investment.
Late 2022
Expected to enhance export volumes in the medium term, particularly for cotton and man-made fiber apparel.