While there isn't a new, separate US-El Salvador trade deal in 2025, the two countries are actively engaged within the CAFTA-DR agreement. In addition, a Customs Mutual Assistance Agreement (CMAA) was signed in 2024 to enhance border security and trade facilitation. El Salvador is also working towards reducing or eliminating tariffs on its exports to the US.
Elaboration:
CAFTA-DR: The Dominican Republic-Central America-United States Free Trade Agreement (CAFTA-DR) is the primary framework governing trade relations between the US and El Salvador. It aims to eliminate tariffs, open markets, reduce service barriers, and promote transparency.
Customs Mutual Assistance Agreement (CMAA): This agreement, signed in October 2024, strengthens the partnership between the US and El Salvador on border security and trade facilitation. It includes provisions for enhanced cooperation on customs enforcement, training, and combating transnational crimes.
Tariff Negotiations: El Salvador is actively pursuing negotiations with the US to reduce or eliminate tariffs on its exports. The Salvadoran Ministry of Economy has indicated that these negotiations are in their final stages.
Economic Context: El Salvador's economy is experiencing growth, with the IMF projecting a 2.47% increase in 2025. The US is a major trading partner, with significant exports and imports between the two countries.
Other Developments: El Salvador's decision to adopt the US dollar as its official currency has also influenced its economic relationship with the US. Additionally, there have been discussions regarding agreements related to migration and the detention of migrants.
US
trade deal with El Salvador 2025
The
U.S. has a long-standing trade relationship with El Salvador, primarily
governed by the
Dominican
Republic-Central America-United States Free Trade Agreement (CAFTA-DR). This
agreement, signed in 2004 and effective for El Salvador in 2006, aims to
eliminate tariffs and non-tariff barriers on goods, services, and agriculture,
while also promoting regional economic integration and transparency.
Here's
a breakdown of the U.S.-El Salvador trade relationship in 2025:
· CAFTA-DR
Implementation: The agreement reached full implementation on January 1,
2025, meaning virtually all goods are now duty-free between the United States
and El Salvador, provided they meet the agreement's rules of origin. This
complete elimination of tariffs is expected to further boost U.S. exports,
particularly in areas like dairy, where exports have seen significant growth
under the agreement.
· Impact of CAFTA-DR:
o Positive
Impact: CAFTA-DR has significantly increased trade and foreign direct
investment between the U.S. and El Salvador. U.S. companies have established a
strong presence in El Salvador, contributing to economic growth. It has also
facilitated the free movement of goods within Central America's Northern
Triangle (El Salvador, Honduras, and Guatemala), according to Salvadoran
officials.
o Challenges: Concerns
remain about the impact of subsidized U.S. agricultural products on El
Salvador's small farmers, and the agreement has not necessarily led to a
significant increase in their exports to the U.S. Non-tariff barriers, like
lengthy approval processes for imports, also continue to pose challenges for
some U.S. exporters.
· Trade
Volumes: U.S.-El Salvador goods trade totaled an estimated $6.9 billion in
2024, with the U.S. maintaining a trade surplus of $2.2 billion. U.S. exports
primarily include fuel products, corn, soy, and cotton, while imports from El
Salvador are mainly apparel, electrical capacitors, coffee, and sugar.
· Investment: U.S.
foreign direct investment (FDI) in El Salvador was estimated at $1.5 billion in
2023. El Salvador's dollarized economy, preferential trade terms, and improved
security situation are considered strengths for attracting investment. However,
challenges remain, including liquidity constraints, and a potentially
unpredictable policy environment, according to the U.S. Department of State.
· Additional Agreements
and Restrictions:
o In February 2025, El
Salvador and the U.S. ratified a Customs Mutual Assistance Agreement (CMAA) to
combat customs violations and transnational crime, according
to the Library of Congress.
o The U.S. extended
restrictions on the importation of certain archaeological and ecclesiastical
ethnological material from El Salvador through March 2, 2030.
Potential
Impacts of Broader U.S. Trade Policies:
· On April 2, 2025,
President Trump issued an executive order imposing a minimum 10% tariff on U.S.
imports from all countries, including El Salvador, effective April 5, 2025,
notwithstanding existing trade agreements like CAFTA-DR. This could create
uncertainty and negatively impact trade with El Salvador.
· The U.S. is also
actively engaged in resolving issues related to non-tariff barriers and global
competition, which could further shape the future of trade relations with El
Salvador.
Overall,
the U.S.-El Salvador trade relationship in 2025 is largely defined by the
CAFTA-DR agreement, which promotes free trade and investment. However, ongoing
challenges related to the agreement's impact on certain sectors, non-tariff
barriers, and broader shifts in U.S. trade policy could significantly affect
the future of this important bilateral relationship.
https://www.google.com/search?q=us+trade+deal+with+el+salvador+2025
In
2025, the U.S. sent 238 Venezuelan migrants, accused of being members of
the Tren
de Aragua gang, to
El Salvador's mega-prison, CECOT. This was part of
a prisoner swap where the U.S. secured the release of 10 Americans and
political prisoners held in Venezuela. The U.S. also deported 23
Salvadoran gang members to the same prison.
El Salvador's nominal GDP in 2025 is projected to be around $36.1 billion USD. El Salvador's nominal GDP per capita is projected to be $5,722.05 in 2025. The estimated population of El Salvador in 2025 is around 6.37 million people. The unemployment rate in El Salvador is expected to be around 5.22% in 2025.
Norb Leahy, Dunwoody GA Tea Party Leader
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