US signs reciprocal trade agreement with El Salvador, imposing 10% base tariff with exemptions

US Signs Reciprocal Trade Agreement with El Salvador, Imposing Tariffs and Exemptions

The United States and El Salvador have signed an Agreement on Reciprocal Trade, marking a significant development in their bilateral relations. The agreement was finalized by the United States Trade Representative on January 30, 2026, setting a 10% base tariff rate on certain goods traded between the two nations.

While providing exemptions for qualifying textiles and apparel, the pact is seen as a key step towards strengthening economic cooperation between the US and El Salvador, both of which have been actively engaged in efforts to promote regional trade integration. The agreement is also viewed as a critical component of the Biden administration's broader strategy to promote free and fair trade around the world.

Historically, the US and El Salvador have enjoyed close economic ties, with US companies investing heavily in the Central American nation's manufacturing sector. However, tensions had risen over issues related to trade, particularly following the implementation of tariffs by the Trump administration on certain goods imported from El Salvador.

The current agreement is seen as a gesture of goodwill and an effort to repair relations between the two countries. The terms of the agreement provide for a 10% base tariff rate on certain goods traded between the US and El Salvador, with exemptions applied to qualifying textiles and apparel that meet specific criteria under the CAFTA-DR treaty.

The exemptions will apply to products such as clothing, footwear, and accessories, which are expected to benefit from the agreement by reducing trade barriers and promoting greater economic cooperation. The implications of the agreement extend beyond the two nations involved, with potential impacts on regional trade dynamics and global supply chains.

As a key player in the region, El Salvador's participation in the agreement is likely to have significant effects on its neighbors, including Guatemala, Honduras, and Nicaragua, all of which are also engaged in efforts to promote regional integration. Looking ahead, the agreement is seen as an important step towards strengthening economic ties between the US and El Salvador.

The pact is expected to promote greater trade cooperation, increase exports, and create new opportunities for business investment in both countries. As the global economy continues to evolve, the US-El Salvador reciprocal trade agreement is likely to play a significant role in shaping regional trade dynamics and promoting economic growth in Central America.