By David Lawder

(Reuters) -The Trump administration may impose tariffs of up to 100% on Nicaraguan goods after finding that Nicaragua's labor and human rights policies are unreasonable and impeding U.S. commerce, the U.S. Trade Representative's office said on Monday.

Releasing the results of a "Section 301" unfair trade practices probe launched during the final days of President Joe Biden's administration, USTR said it proposed tariffs of up to 100% on all or some of Nicaragua's goods. President Donald Trump will make the ultimate decision on which action to take.

The agency also proposed suspension of all or part of Nicaragua's benefits under Central America-Dominican Republic Free Trade Agreement, immediately or phased in over 12 months, according to the statement.

Nicaragua has enjoyed zero U.S. tariffs on consumer and manufactured goods and over half of its farm products since 2006 when it adopted the CAFTA-DR trade deal. If Trump chooses the maximum punishments, the total tariffs would exceed 100%, as revoking free trade benefits would cause it to revert to prior "Most Favored Nation" tariff rates.

"As a result of the determination that Nicaragua’s acts, policies, and practices are actionable, the U.S. Trade Representative has proposed a range of responsive actions," the U.S. trade representative's office said in a statement.

the U.S. imported $4.6 billion worth of goods from Nicaragua in 2024, for a $1.9 billion U.S. trade deficit.

The USTR report found that Nicaragua's Ortega-Murillo regime has engaged in "increasingly pervasive abuses of labor rights, as well as human rights and fundamental freedoms and has systematically dismantled the rule of law protections against arbitrary government action."

These include allowing the use of child and forced labor, human trafficking, repression of freedom of association and collective bargaining, arbitrary arrests and removal of the citizenship of union members, USTR said.

The agency is taking written comments from industry and the public on the proposed actions until November 19.

The Section 301 probe was opened by Biden's former U.S. Trade Representative Katherine Tai, a longtime champion of labor rights, on December 10, 2024.

(Reporting by David Lawder, Christian Martinez and Ismail Shakil; Editing by Caitlin Webber and Cynthia Osterman)