Infobyte·10 min·December 2025

Trade (un)balance with the United States

Honduras depends heavily on the United States as a trading partner: more than half of its exports and a third of its imports are tied to that market. Although maquila exports increased after CAFTA-DR, imports — particularly of fuel — have grown faster. For Honduras, a new bilateral trade agreement with the United States could help advance pending structural reforms in energy, regulatory framework, and investment protection. It is important for the country to preserve preferential access to the US market and establish itself as a nearby logistics platform.

Giselle Del Carmen — Sendas Think Tank

Translated from Spanish with AI assistance and reviewed by our editors. See a translation error? Email us.

The United States is beginning to redefine its trade approach

Two decades after it was signed, the United States is moving away from CAFTA-DR and toward trade agreements more closely aligned with its own interestsFootnote 1^[1].
In Central America, this new approach has produced a differentiated tariff structure and bilateral negotiations (Figure 1):
- Nicaragua faces sanctions that could affect the entire Central American textile industry by putting at risk the shared origin system that underpins its integrated production chainFootnote 2^[2].
- In January 2026, Guatemala and El Salvador signed reciprocal trade agreementsFootnote 3^[3] with the US aimed at complementing CAFTA-DR.
CAFTA-DR is the free trade agreement between Central America, the Dominican Republic, and the United States, in force in Honduras since April 2006. Its main objective is to stimulate trade and investment by eliminating tariffs and other trade charges, subject to compliance with rules of origin. The agreement included a gradual tariff phase-down for certain sensitive products such as beans, rice, and cornFootnote 4^[4]. This process concluded in 2025 with the full elimination of tariffs on goods trade between both parties.
It also establishes commitments on customs administration, government procurement, investment, telecommunications, e-commerce, intellectual property rights, environmental and sustainability standards, labor, and agriculture.

Figure 1

Tariffs, Central America, January 2026 (%)

This visualization is currently only available in Spanish.

USA remains the primary trading partner, though other markets have grown in importance

In 2005, the United States absorbed 74% of the country's exports; by 2024, that share had fallen to just over half — equivalent to USD 5,800 million (Figure 2).
This dependence is especially pronounced in the maquila sector: in 2024, 70% of exports of these goods went to the US market (Figure 4).
In the same year, Honduras imported around USD 6,500 million from the US (33% of total imports), down from 50% in 2005 (Figure 3).

In 2005, imports from China accounted for just 2% of the total. Twenty years later, it became the second most important import trading partner. In 2025, 60% of imports from ChinaFootnote 5^[5] were concentrated in (Figure A):

(i) Machinery and equipment, electrical material and parts, sound and image recording or playback devices, and accessories
(ii) Base metals and manufactures thereof
(iii) Transport equipmentFootnote 6^[6]

Figure A

General merchandise imports from China, USD millions

This visualization is currently only available in Spanish.

Figure 2

Exports by destination country, USD millions

This visualization is currently only available in Spanish.

Figure 3

Imports by country of origin, USD millions

This visualization is currently only available in Spanish.

Figure 4

Exports by destination and product, 2024

This visualization is currently only available in Spanish.

Since CAFTA-DR took effect in 2006, Honduras has run a trade deficit with the US

In 2005, before ratifying the free trade agreement, Honduras recorded a trade surplus with the United States of USD 244 million (Figures 5 and 6).
Although exports to this market have grown over the past two decades, the trade deficit has neared one billion dollarsFootnote 7^[7] (Figure 5).
Maquila exportsFootnote 8^[8] grew 1.3 times in value since this agreement took effect, but import growth — especially of fuelsFootnote 9^[9], food, and beverages — has been greater, widening the trade deficit.
- Fuel imports increased tenfoldFootnote 4^[4]; their share rose from 33% to 80% of total fuels and minerals imports (Figure 7).

Figure 5

Trade balance with the United States, USD millions

This visualization is currently only available in Spanish.

Figure 6

Exports and imports to/from the United States, by product, USD millions

This visualization is currently only available in Spanish.

Figure 7

Fuel imports by country of origin

This visualization is currently only available in Spanish.

There is little evidence on the direct impact of CAFTA-DR on Honduras

Rather than a jump in exports to the US market or improvements in economic welfare, the literature suggests the agreement primarily strengthened intraregional trade among Central American countries (Franco-Bedoya and Lee, 2024). The manufacturing sector was the main beneficiaryFootnote 10^[10].
Some studies indicate the agreement does not guarantee productive transformation. In the most successful cases, such as Costa Rica, outcomes depended on pre-existing capacities — human capital, infrastructure, institutional stability, and active FDI attraction policies (Koehler-Geib et al., 2014)Footnote 11^[11].
The evidence suggests that trade liberalization alone does not guarantee lower consumer prices or higher incomes for rural producers. In Honduras, the pass-through of international food prices to domestic prices has been limited and slow, which tempers the expected social impacts of a free trade agreementFootnote 12^[12].

These findings reinforce the idea that the barriers to export expansion are sometimes not tariff-related but logistical, financial, regulatory, and informational. No study exists on the impact of CAFTA-DR specifically in Honduras.

US foreign direct investment has declined sharply

Currently, more than 200 US companies operate in Honduras, concentrated in the manufacturing sector.
Between 2000 and 2010, US FDI accounted for 40% of the total, tied to export-oriented manufacturing investment. Since then its share has fallen, representing just 1% over the last four yearsFootnote 13^[13] (Figure 8) — with a net negative flow of USD 198 million in 2024 (Figure 9).
This decline in US FDI may reflect structural constraints on Honduras's investment climate, including legal insecurityFootnote 14^[14], corruption, infrastructure deficiencies, and shortcomings in licensing and permit processes, among othersFootnote 15^[15].

Figure 8

Composition of Foreign Direct Investment by origin, period average

This visualization is currently only available in Spanish.

Figure 9

US Foreign Direct Investment, USD millions

This visualization is currently only available in Spanish.

Does a new bilateral agreement with the United States open opportunities for Honduras?

Honduras must preserve preferential access to the US market and position itself as a nearby logistics and production platform — strategic for the supply chains the US is seeking to relocate and secure.
Negotiating an agreement can help drive pending structural reforms — in energy, the regulatory framework, and investment protection — and orient growth toward sectors that create jobs in both countries.
The country will need to adapt to the framework set by the United States (similar to that applied with El Salvador and Guatemala), prioritizing conditions and reforms aimed at protecting US investment and production.

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