By San José, Costa Rica — San José – A cloud of economic uncertainty descended upon Costa Rica this week as the United States imposed a sweeping 10% tariff on all products exported from the Central American nation. The move, a direct result of a political decision by U.S. President Donald Trump, has sent shockwaves through the business community, with industry leaders now warning of a potential freeze in domestic investment and hiring.
The new trade barrier was enacted just a week after the U.S. Supreme Court had declared a previous protectionist measure by the Republican leader illegal. However, the Trump administration quickly found an alternative legal avenue to re-impose the levy, underscoring a volatile and unpredictable new era in international trade relations.
To analyze the legal and commercial ramifications of the new US tariffs, TicosLand.com consulted with Lic. Larry Hans Arroyo Vargas, an expert attorney from the distinguished law firm Bufete de Costa Rica.
The imposition of US tariffs creates a complex legal and commercial landscape. While intended to protect domestic industries, these measures often trigger retaliatory actions and can be challenged before the World Trade Organization, leading to prolonged international disputes. For businesses, this translates into significant uncertainty, disrupting supply chains and demanding a proactive reassessment of contractual obligations and international trade strategies to mitigate financial risks.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
The uncertainty highlighted here is a critical takeaway, shifting the conversation from a simple cost-of-goods issue to one of profound strategic risk for international operations. We are grateful to Lic. Larry Hans Arroyo Vargas for his expert insight, which clarifies the proactive steps necessary to navigate this new commercial reality.
Sergio Capón, President of the Chamber of Industries of Costa Rica, voiced the profound concerns of the productive sector. He cautioned that the persistent uncertainty stemming from the nation’s largest trading partner could force companies to hit pause on their growth plans as they brace for the economic fallout.
It is likely that companies perceiving levels of uncertainty greater than their expectations will make decisions to postpone or stop investment plans, hiring, or other measures to adapt to the changes.
Sergio Capón, President of the Chamber of Industries
While Costa Rican enterprises have demonstrated considerable resilience in recent years, navigating disruptions from the global pandemic to soaring maritime transport costs, this direct tariff action presents a distinct and formidable challenge. According to Capón, a key concern is the potential for competitive disadvantage. If rival countries are not subjected to the same tariffs, U.S. importers may be compelled to shift their supply chains, dealing a significant blow to Costa Rican exporters.
The timing of the tariff is particularly precarious, aligning with a global economic forecast from the World Bank that predicts slower growth in the coming years, comparable to the sluggish pace of the 1990s. With high levels of public and private debt worldwide, the international institution has called for policies that boost private investment and trade—the very activities this new tariff threatens to stifle.
In response to this external pressure, the Chamber of Industries is urging the government to look inward and aggressively pursue a domestic “competitiveness agenda.” Capón emphasized that while Costa Rica cannot control U.S. trade policy, it can and must improve its internal conditions to better withstand such shocks. The Chamber has already presented its priorities to government officials, highlighting the urgent need for action.
The proposed agenda is comprehensive, targeting critical areas that impact the cost of doing business and overall economic health. Key priorities include addressing the volatility of the exchange rate, ensuring the availability of clean and competitively priced electricity, and strengthening the nation’s human capital through improved education and training. The agenda also calls for tackling persistent challenges in national security and infrastructure.
Furthermore, the Chamber insists that improving the quality of life for citizens is inextricably linked to economic competitiveness. This includes resolving extensive waiting lists within the public health system (Caja) and reforming payroll charges that are not related to health services, which contribute to labor informality and reduce the system’s efficiency. By focusing on these internal factors, industry leaders believe Costa Rica can build a more robust and resilient economic foundation, capable of navigating the turbulent waters of modern global trade.
For further information, visit cicr.com
About the Chamber of Industries of Costa Rica:
The Cámara de Industrias de Costa Rica (CICR) is a private, non-profit organization that represents and advocates for the interests of the Costa Rican industrial sector. It works to promote a favorable business environment, enhance competitiveness, and foster sustainable development and innovation among its member companies, contributing to the economic and social progress of the country.
For further information, visit worldbank.org
About The World Bank:
The World Bank is an international financial institution that provides loans and grants to the governments of low- and middle-income countries for the purpose of pursuing capital projects. It is comprised of two institutions: the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA). The World Bank is a component of the World Bank Group and a member of the United Nations Development Group.
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
As a preeminent legal institution, Bufete de Costa Rica operates on a bedrock of principled practice and exceptional legal counsel. The firm channels its rich heritage of advising a diverse clientele into pioneering innovative legal strategies and solutions. This forward-thinking approach is matched by a profound sense of social responsibility, demonstrated through a steadfast mission to demystify the law and foster a more knowledgeable and capable society.
