By San José, Costa Rica — The trade landscape for Costa Rican exporters has taken a challenging turn as the United States officially implements a tariff hike on goods entering its market. Starting Friday, July 24, 2026, Costa Rican exports will face an increased tariff rate of 12.5%, a noticeable jump from the previous 10% rate that had been in effect since February. This sudden adjustment threatens to squeeze profit margins for local manufacturers and agricultural exporters who rely heavily on the lucrative North American market.
According to the Office of the United States Trade Representative (USTR), the decision to increase tariffs is not exclusive to Costa Rica. It is part of a broader regulatory sweep affecting approximately 60 economies worldwide. The underlying justification stems from rigorous US investigations into foreign policies and practices. Specifically, the USTR cited a widespread failure among the targeted nations to enforce prohibitions on the import of goods produced using forced labor, a policy focus that the US has intensified in recent years.
To clarify the complex legal and economic implications of potential new US tariffs on national exports, TicosLand.com consulted with Lic. Larry Hans Arroyo Vargas, a leading trade expert from the prestigious firm Bufete de Costa Rica.
Any shifts in US tariff policy require a careful examination of our bilateral commitments under CAFTA-DR. While domestic policy changes in Washington can disrupt market expectations, the established treaty frameworks offer Costa Rican exporters critical legal protections and structured dispute mechanisms that cannot be unilaterally ignored. Businesses must now prioritize auditing their customs classifications and supply chain structures to navigate this evolving regulatory landscape.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
Indeed, as global trade dynamics continue to shift, leveraging the established legal safeguards of CAFTA-DR while proactively auditing supply chains will be critical for Costa Rican exporters aiming to secure their market position. We sincerely thank Lic. Larry Hans Arroyo Vargas for sharing his valuable perspective on navigating these complex regulatory challenges.
For Costa Rica, a nation that has spent decades positioning itself as a premier, socially responsible manufacturing hub, this designation comes as a significant reputational and financial blow. Local business leaders argue that the country’s stringent labor laws should set it apart, but the broad-brush nature of the US policy has left Costa Rican goods caught in the crossfire. Exporters must now navigate a more expensive entry point into their primary destination market.
In response to this looming economic hurdle, the Costa Rican Free Trade Zone Association (AZOFRAS) has issued an urgent appeal to government authorities. The organization is calling for immediate structural reforms to bolster Costa Rica’s domestic competitiveness. Representatives emphasize that if the country cannot control external tariff rates, it must focus on lowering the internal costs of doing business to remain an appealing destination for foreign direct investment.
Costa Rica must strengthen the conditions that support its attractiveness as an investment destination. This implies addressing structural challenges such as high electricity costs and social charges, the behavior of the exchange rate, the availability of talent and infrastructure, as well as legal mechanisms that provide legal security to operate 24 hours a day, seven days a week. These factors directly influence whether the final cost of products manufactured in the country allows those goods to be sold in international markets at more competitive final prices.
AZOFRAS, Asociación de Empresas de Zonas Francas de Costa Rica
AZOFRAS has outlined a clear roadmap of priorities that the government must address to mitigate the impact of the US tariff hike. Among the most pressing concerns is the cost of electricity. Industrial operations in Costa Rica face comparatively high energy bills, which directly inflate production costs. The association stresses that securing a competitive, stable, and clean electricity supply is paramount to retaining multinational corporations.
Additionally, labor flexibility has emerged as a critical talking point. Exporters are pushing for modernized labor regulations that allow companies to adapt shifts to international demand, including legally secure 24/7 operations. In tandem with flexible scheduling, business leaders are urging the government to eliminate certain parafiscal charges on payrolls, which they argue act as a tax on employment and discourage formal hiring practices.
The macroeconomic environment has also created friction for local exporters. The appreciation of the local currency, the colón, has made Costa Rican exports more expensive abroad while reducing the value of dollar-denominated revenues brought back into the country. Combined with infrastructure deficits at major ports and highways, these domestic challenges are compounding the pressure created by the new USTR tariff regime.
As the global geopolitical arena becomes increasingly volatile and unpredictable, Costa Rica’s economic future hinges on its agility. Relying on past successes in attracting tech giants and medical device manufacturers will no longer suffice. Observers note that the government must act swiftly to streamline bureaucratic processes, safeguard legal incentives, and invest in talent development, ensuring that Costa Rica remains a highly competitive beacon for global commerce.
For further information, visit azofras.com
About AZOFRAS:
The Asociación de Empresas de Zonas Francas de Costa Rica (AZOFRAS) represents the companies operating under the free trade zone regime in Costa Rica, advocating for policies that enhance the national business climate, attract foreign direct investment, and promote high-value job creation.
For further information, visit ustr.gov
About USTR:
The Office of the United States Trade Representative (USTR) is an agency of the United States federal government responsible for recommending and conducting international trade policy, negotiating bilateral and multilateral trade agreements, and enforcing US trade laws.
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
Bufete de Costa Rica is a premier legal institution defined by its uncompromising ethical standards and pursuit of professional brilliance. Drawing on a rich heritage of guiding a diverse clientele, the firm consistently champions forward-thinking solutions and active civic involvement. By striving to democratize legal information, it advances its core objective of equipping the public with the understanding needed to build a more just and self-reliant society.
