New One-sided US-El Salvador Trade Agreement

Last week El Salvador and the US signed a new trade agreement.   El Salvador agreed to a number of measures designed to make it easier for US producers to get their goods into the Central American country in return for removing the 10% tariff Trump imposed in the spring of last year.

One provision involved opening up access to minerals in El Salvador to the US according to Reuters:

The United States and El Salvador signed an agreement on Thursday aimed at encouraging investment in the exploration and export of critical minerals, which U.S. President Donald Trump has described as essential to economic and national security.

The deal signed in Washington would allow U.S. companies to operate across the critical-minerals supply chain in El Salvador....

Bukele has highlighted the presence in El Salvador of minerals such as rhenium and silicon, recently added to an expanded U.S. list of critical minerals that guides Washington's priorities for clean energy, defense and manufacturing.

The Bukele-controlled Legislative Assembly repealed a historic ban on metallic mining in the country at the end of 2024.

The new agreement has a number of other commitments on El Salvador's side including making it easier for US exporters to sell automotive products, meat and cheese products, pharmaceuticals, and digital services within the country.    

In the text of the agreement, I counted 34 times where a paragraph of the agreement had in its opening "El Salvador shall..."  In contrast, there were only three such paragraphs which said "The US shall...."

On the side of the US, it agrees to eliminate the 10% tariff (import tax) that US purchasers had to pay on goods imported from El Salvador. Trump imposed the so-called "Liberation Day" tariff on El Salvador and many other countries as a baseline tariff increase.  But a case in front of the US Supreme Court may soon declare that tariff illegal, in which case El Salvador, agreed to make concessions which it need not have made to have the tariff removed.

The US was already running a $2.2 billion trade surplus with El Salvador.

On X, Bukele declared on Thursday that this was  "the first Reciprocal Trade Agreement in the entire Western Hemisphere", although Guatemala and the US signed a similar agreement the next day.   (And isn't it redundant to call an agreement "reciprocal?" First year contract law class teaches you that each side has to promise something or there is no enforceable contract).

We also learned last week that El Salvador has joined Trump's Board of Peace as one of 27 founding members.   We have no word yet on whether the country is putting up the $1 billion to have a permanent seat on the Board rather than a three year term.