El Salvador in Brief: Overview and U.S. Relations

Contents

• Political and Economic Conditions
• Insecurity and State of Exception
• Economic Context
• U.S.-El Salvador Relations and Key Issues for Congress
• Foreign Assistance
• Counternarcotics and Other Security Cooperation
• Migration Issues
• Commercial Ties

Summary

El Salvador is a small, densely populated country in Central America with deep historical, migratory, and economic ties to the United States. The United States has played a prominent role in El Salvador's political and economic development, including through extensive involvement in the country's civil conflict from 1980 to 1992. The conflict also contributed to increased migration flows from El Salvador to the United States that continued into the 2020s, driven in part by security and economic factors. The U.S. Census Bureau estimated that about 1.5 million Salvadoran-born individuals resided in the United States in 2024. This total includes more than 170,000 Salvadoran nationals who have relief from removal and work authorization through Temporary Protected Status (TPS). The United States is also a key trade and investment partner for El Salvador, as well as the country's main source of remittances. According to El Salvador's central bank, remittances to El Salvador from abroad totaled about $10 billion in 2025, the equivalent of roughly 27% of El Salvador's dollarized economy (by gross domestic product).

Since 2019, President Nayib Bukele and his New Ideas (NI) party have incrementally consolidated power across El Salvador's executive, legislative, and judicial branches to become the dominant force in Salvadoran politics. Since he assumed office, President Bukele and NI's majority in El Salvador's unicameral legislature have overseen several changes to the country's political and electoral processes, including through constitutional amendments in 2025 that permit continuous presidential reelection, among other things. President Bukele has presided over a significant decrease in gang-related violence, which has plagued El Salvador since the 1990s. Bukele's security strategy is underpinned by an ongoing state of exception, which permits the suspension of some civil liberties and enables mass arrests of anyone suspected of belonging to or aiding gangs. Despite concerns from international and local observers about human rights violations under the state of exception and rising authoritarianism under the Bukele administration, President Bukele generally has received strong domestic approval ratings compared with those of other Latin American leaders, in part due to the reductions in gang violence.

Successive U.S. Administrations have sought to collaborate with El Salvador, including on migration and security issues. Bilateral cooperation in these areas has further strengthened during the second Trump Administration. In 2025, the two governments concluded several agreements, including an arrangement enabling alleged members of terrorist organizations deported from the United States to be housed in Salvadoran prisons. The Trump Administration also designated two El Salvador-based gangs as foreign terrorist organizations and specially designated global terrorist entities.

During the 119^th Congress, some Members have debated U.S. policy toward El Salvador and introduced legislation to shape the executive branch's approach to the bilateral relationship. Some Members of Congress praised the Trump Administration's efforts to increase bilateral cooperation on migration and security issues. Other Members, citing human rights and transparency concerns, criticized the arrangement to house U.S.-deported alleged terrorists in Salvadoran prisons and introduced legislation to prohibit U.S. funding for some Salvadoran prisons (H.R. 4001) and to direct the President to impose visa and asset-blocking sanctions on several Bukele administration officials (S. 2058 and H.R. 6878), among other measures. More broadly, some Members have expressed support for President Bukele and his policies, whereas other Members have voiced concerns about rising authoritarianism and human rights violations under Bukele's administration.

Ahead of the September 9, 2026, expiration of El Salvador's TPS designation, some Members introduced legislation (H.R. 10297) and called on the Trump Administration to extend TPS status for Salvadorans. On September 9, 2026, U.S. Citizenship and Immigration Services published an alert on its website stating that "an announcement on El Salvador's TPS will be made at the appropriate time. Until such announcement is made, Salvadoran individuals present in the U.S. under TPS retain protection including work authorization." U.S. officials have not made further announcements about El Salvador's TPS status.

El Salvador is a small, densely populated country in Central America of 6.4 million people with deep historical, migratory, and economic ties to the United States (see Figure 1 for map and basic facts). In the 1980s, amid El Salvador's 12-year civil conflict (1980-1992) and U.S. Cold War concerns about the spread of communism, the U.S. government provided military and economic aid to support the Salvadoran government's counterinsurgency efforts against the leftist Farabundo Martí National Liberation Front (FMLN), an armed opposition group.¹ The United States later supported a 1992 peace accord that ended the conflict and incorporated the FMLN into the political system.² The conservative National Republican Alliance (ARENA) controlled the presidency from 1989 to 2009, followed by 10 years of rule under FMLN administrations. Popular disaffection with chronic corruption, sluggish economic growth, and gang-related violent crime under both parties contributed to the election of political outsider Nayib Bukele in 2019. Bukele was the first candidate in 30 years to win the presidency without support from ARENA or the FMLN. The 119^th Congress has debated U.S. policy toward El Salvador and introduced legislation to shape the executive branch's approach to the bilateral relationship, including on foreign assistance, security cooperation, migration, and trade and economic issues.

Political and Economic Conditions

Over the past seven years, President Bukele and his New Ideas party (NI, founded in 2017) have become the dominant force in Salvadoran politics. In 2021, NI used its two-thirds majority in the unicameral Legislative Assembly (Asamblea Legislativa) to consolidate power over other government institutions, in part by dismissing and replacing the attorney general and five magistrates of El Salvador's supreme court. In February 2024, after Bukele-appointed magistrates on the supreme court's constitutional chamber reinterpreted several articles of the constitution that appeared to prohibit consecutive presidential reelection and ruled that Bukele could run for another presidential term, Bukele won reelection with 84.7% of the vote.³ NI secured 54 of 60 seats in concurrent national legislative elections, and NI and allied parties gained control of 43 of 44 municipalities in local elections held a month later.⁴

President Bukele has signed into law several NI majority-passed measures to modify El Salvador's political and electoral processes. A 2023 electoral reform reduced the number of legislators from 84 to 60 and the number of municipalities from 262 to 44. In February 2025, the legislature passed a constitutional amendment eliminating a requirement that any proposed constitutional reforms be approved by two consecutive legislatures, streamlining the process for future constitutional amendments. In 2025 and 2026, the Legislative Assembly passed additional Bukele-backed constitutional amendments that, inter alia, permit indefinite reelection of the president, extend presidential terms from five to six years, apportion six seats in the national legislature to the Salvadoran diaspora community, eliminate constitutionally required funding for the judicial branch, and enable life prison sentences.⁵

Figure 1. El Salvador at a Glance

Sources: Map created by CRS using data from U.S. Department of State, Database of Global Administrative Areas, and Esri. Factual information from International Monetary Fund (IMF); World Economic Outlook Database, April 2026; World Bank (WB); El Salvador's Central Bank data via Trade Data Monitor (TDM); and El Salvador's Central Bank, Banco Central de Reserva de El Salvador (BCR).

In accordance with a 2025 reform, the next presidential election is scheduled to occur in February 2027, concurrently with legislative and municipal elections. In July 2026, NI nominated Bukele to run for a third presidential term.⁶ Several nongovernmental human rights and democracy organizations argue that the political and legal changes during Bukele's tenure have weakened El Salvador's system of checks and balances by further concentrating power in the executive branch.⁷ President Bukele's supporters counter that the changes have strengthened democracy by empowering Salvadoran voters to decide how long Bukele may serve as president.⁸

International and local observers have voiced concerns about increasing authoritarianism under President Bukele. According to the Economist Intelligence Unit's (EIU's) 2026 Democracy Index, El Salvador has fallen 25 places since Bukele assumed office in 2019, ranking 20^th out of 24 Latin American and Caribbean countries in terms of the state of democracy.⁹ In May 2025, Bukele and allied lawmakers secured passage of a foreign agents law which, among other measures, increases government control of nongovernmental organizations and imposes a 30% tax on funds received from foreign sources, including donations. Bukele administration officials assert that the law aims to increase transparency around activities funded by foreign entities. Some critics maintain that the law unduly restricts freedom of association and expression.¹⁰

Some observers suggest that the foreign agents law is one of several actions the Bukele administration has taken that curtail civic space and press freedoms. These actions have prompted some groups and journalists to leave the country.¹¹ For example, several international organizations have expressed concern about the ongoing detainment of lawyer and human rights activist Ruth López, who investigated government corruption on behalf of El Salvador-based human rights group Cristosal before she was arrested by Salvadoran authorities in May 2025 on charges of illicit enrichment.¹² López, whose case has been sealed by court order, has been held in pretrial detention for over a year.¹³

Despite seeming attempts to curb democratic participation and close civic space, President Bukele appears to have maintained broad popularity throughout his administration, according to public polling. In a May 2026 poll, nearly 88% of respondents approved of Bukele's performance, with 64% citing advances in citizen security as his principal achievement.¹⁴

Insecurity and State of Exception

Since the 1990s, gangs with origins in Southern California—including U.S.-designated foreign terrorist organizations the Mara Salvatrucha (MS-13, designated in February 2025) and Barrio 18 (designated in September 2025)—have undermined security in El Salvador.¹⁵ The Bukele administration initially sought to negotiate with gang leaders to reduce violence in exchange for illicit favors (which led to U.S. sanctions on two officials in 2021) but later opted for a hard-line security strategy.¹⁶ After a wave of gang violence in March 2022, President Bukele sought and the legislature approved an ongoing state of exception, which permitted the suspension of some civil liberties and enabled mass arrests of anyone suspected of belonging to or aiding gangs. Lawmakers approved the 54^th consecutive 30-day extension of the state of exception in August 2026.¹⁷

In 2025, homicides in El Salvador declined by roughly 97% compared with 2019 levels amid the state of exception, according to El Salvador's national police.¹⁸ Although homicides have declined sharply, human rights groups reported having documented cases of torture, arbitrary detention, verbal and physical abuse, and death in custody in the country's overcrowded prison system, as well as a lack of due process for detainees, some of whom have been sentenced through mass trials.¹⁹ Since the state of exception began, Salvadoran authorities have detained more than 92,000 people (as of June 2026)²⁰and one local human rights group estimated that at least 570 people have died in El Salvador's prisons (as of September 2026).²¹ A March 2026 report from a group of international jurists concluded that "there are reasonable grounds to believe that… crimes against humanity are being committed" under the state of exception.²² In a break from previous iterations, the U.S. Department of State's 2024 Country Report on Human Rights (released in August 2025) asserted that "there were no credible reports of significant human rights abuses" in El Salvador. Some observers questioned whether the report sought to gloss over El Salvador's human rights record amid strengthening U.S.-El Salvador relations under the second Trump Administration.²³

Economic Context

According to the International Monetary Fund (IMF), the Salvadoran economy grew by an average of 3.0% annually from 2022 to 2024, lagging behind other Central American countries.²⁴ Poverty, vulnerability to natural disasters and climate-related shocks, high levels of public debt, and low levels of foreign direct investment (FDI) have impeded economic growth.²⁵ According to a UN regional commission, El Salvador recorded the lowest level of FDI among Central American countries in 2025.²⁶ The IMF estimated that the economy grew by 3.7% in 2025; according to one economist, this growth was driven in part by a nearly 18% increase in remittances.²⁷ Some observers have attributed elevated remittance flows to Central America in part to migrants from the United States sending more money to their home countries amid U.S. migration policy uncertainty.²⁸

IMF officials project that the Salvadoran economy will grow by 4.5% in 2026 due to several factors, including strong investment, private consumption, and remittances.²⁹ El Salvador's tourism sector also is expanding; the country reportedly received 4.1 million international visitors in 2025, a nearly 36% increase from 2019 levels, possibly aided by improved public security conditions.³⁰ Reduced rainfall related to an El Niño weather phenomenon, however, could disrupt agricultural production and pose risks to economic growth in 2026 and early 2027.³¹ About 58% of El Salvador is part of the "dry corridor," a noncontiguous strip of Central America that is susceptible to cyclical droughts and flooding.³²

El Salvador's dollarized economy is closely tied to that of the United States through trade and investment linkages and remittances sent from Salvadorans working in the United States, which accounted for nearly 96% of total estimated remittances received from abroad in 2025 (see "Migration Issues").³³ In 2025, El Salvador's remittance flows totaled nearly $10 billion, the equivalent of roughly 27% of El Salvador's estimated gross domestic product, according to Salvadoran central bank figures.³⁴

The Bukele administration has sought to improve government finances and increase FDI, while pursuing unconventional monetary policies related to cryptocurrencies. In February 2025, IMF officials approved a new 40-month, $1.4 billion financial agreement with El Salvador tied to structural reforms aimed at strengthening El Salvador's public finances, improving governance and transparency, and addressing risks related to Bitcoin.³⁵ El Salvador's legislature approved a Bukele-backed reform to make Bitcoin legal tender in 2021 but reversed course in January 2025, reportedly amid pressure from IMF officials to reduce Bitcoin-related financial risk.³⁶ According to the IMF, the Bukele administration continued to invest in Bitcoin with "private donations" following the agreement, but the Salvadoran government is not expected to make additional Bitcoin purchases with public funds.³⁷

U.S.-El Salvador Relations and Key Issues for Congress

Historically, the United States has played a prominent role in El Salvador's political and economic development, including through extensive involvement in the El Salvador's civil conflict in the 1980s. Successive U.S. Administrations have sought to collaborate with El Salvador, including on migration and security issues. U.S. relations with the Bukele administration grew tense amid U.S. foreign assistance cuts during the first Trump Administration and public criticism of democratic backsliding and targeted sanctions under the Biden Administration. Relations have since strengthened during the second Trump Administration. In April 2025, President Trump hosted President Bukele at the White House, where he praised Bukele's performance, including his efforts to stop crime.³⁸ The two leaders also reportedly met privately in the White House in July 2026, but neither government issued an official statement.³⁹

In 2025, several high-level U.S. officials, including Secretary of State Marco Rubio and then-Secretary of Homeland Security Kristi Noem, visited El Salvador. The two governments concluded several agreements, including an arrangement enabling alleged members of terrorist organizations deported from the United States to be housed in Salvadoran prisons (see "U.S. Deportation of Alleged Terrorists to El Salvador").⁴⁰ Some Members of Congress praised the Trump Administration's efforts to increase bilateral cooperation on migration and security issues.⁴¹ Other Members, citing human rights and transparency concerns, have criticized the arrangement to house alleged U.S.-deported terrorists in Salvadoran prisons and have introduced related legislation, including a proposed prohibition on U.S. funding for some Salvadoran prisons (H.R. 4001).⁴² Introduced resolutions (S.Res. 195/H.Res. 368), pursuant to Section 502B of the Foreign Assistance Act of 1961, as amended (22 U.S.C. §2304), would require the State Department to provide a report within 30 days of adoption on human rights practices in El Salvador, including the treatment of third-country individuals transferred from the United States; in May 2026, the Senate rejected a motion to discharge S.Res. 195 in a 45-50 vote.

During the 119^th Congress, a number of Members' positions regarding the U.S.-El Salvador prison arrangement have reflected broader congressional debates relating to El Salvador. Some Members have voiced concerns about rising authoritarianism and human rights abuses under his administration, whereas other Members have showed support for President Bukele and his policies and disputed allegations of human rights abuses in El Salvador.⁴³ Some Members have introduced legislation (S. 2058 and H.R. 6878) that would, inter alia, direct the President to impose visa and asset-blocking sanctions on several high-level Bukele administration officials and prohibit U.S. assistance to the Salvadoran government for at least four years.

Foreign Assistance

Successive U.S. Administrations have allocated foreign assistance to promote economic development, improve governance, and address insecurity in El Salvador. U.S. assistance has sought to reduce unauthorized migration, counter drug trafficking, and strengthen democratic institutions, among other U.S. objectives.⁴⁴ Between March 2019 and June 2020, the first Trump Administration suspended most new foreign assistance to El Salvador, Guatemala, and Honduras (known collectively as the Northern Triangle) and reprogrammed about $396 million of FY2018 assistance for those countries, including $51.7 million of bilateral assistance for El Salvador, in response to continued unauthorized migration from the Northern Triangle to the United States.⁴⁵ The Biden Administration increased foreign assistance allocations to the Northern Triangle, with a focus on addressing the root causes of unauthorized migration from those countries to the United States.

The United States obligated an estimated $138.7 million in foreign assistance to El Salvador in FY2025, roughly 41% less than it provided in FY2024. The now-dismantled U.S. Agency for International Development (USAID) managed about 85% of the obligated assistance, followed by the Department of State (14%) and the Peace Corps (1%).⁴⁶ U.S. assistance for El Salvador aimed, among other goals, to improve government accountability and transparency; to promote private sector competitiveness; to increase citizen security; and to provide education, health, emergency food, and other aid. FY2025 foreign aid data may change with future reporting updates. A February 2026 report from USAID's Office of Inspector General (OIG) stated that USAID managed 66 programmatic awards in El Salvador with a total estimated value of $1.63 billion at the beginning of 2025.⁴⁷ All such programs were terminated between January and March 2025, during the Trump Administration's "pause" and review of U.S. foreign assistance and dismantling of USAID.⁴⁸ In 2026, the United States has provided $55 million in humanitarian assistance to El Salvador as part of a wider December 2025 agreement with the United Nations. It is unclear whether the Trump Administration has initiated other foreign aid programs for El Salvador.⁴⁹

Congress has placed restrictions on some U.S. aid to El Salvador since FY2016. Section 7045(b)(2) of the National Security, Department of State, and Related Programs Appropriations Act, 2026 (FY2026 NSRP; P.L. 119-75, Division F), for example, requires the State Department to withhold 50% of National Security Investment Programs and security assistance made available for assistance to the Salvadoran government until the Secretary of State certifies that the Salvadoran government has met conditions related to corruption, human rights, and migration, among other issues. The State Department certified El Salvador under this provision for FY2026 in July 2026.⁵⁰ Section 7045(b)(2)(C) of P.L. 119-75 also prohibits Foreign Military Financing aid to El Salvador, except for programs that support humanitarian assistance and disaster response. The House-passed FY2027 NSRP appropriations bill (H.R. 8595) did not include such restrictions.

Counternarcotics and Other Security Cooperation⁵¹

Since FY2012, successive U.S. Presidents have designated El Salvador as a major transit country for illicit drugs, primarily cocaine.⁵² State Department officials have characterized U.S.-El Salvador counternarcotics cooperation as robust, and such efforts have included information sharing, equipment transfers, and law enforcement training to enhance Salvadoran authorities' capacity to combat drug trafficking and transnational crime.⁵³ Since FY2010, the United States has provided some assistance to build the capacity of El Salvador's law enforcement and judicial institutions through the Central America Regional Security Initiative. Prior to providing security assistance, the U.S. government must vet potential assistance recipients for possible involvement in human rights abuses, pursuant to several laws commonly referred to as Leahy Laws.⁵⁴

El Salvador has served as a hub for other U.S. counternarcotics activities. The U.S. military conducts aerial counternarcotics monitoring and detection missions from a Cooperative Security Location at Comalapa International Airport outside of San Salvador pursuant to a 2000 agreement that has been extended several times.⁵⁵ In August 2025, some news outlets reported that a U.S.-based plane operating out of another Salvadoran airport, Ilopango International Airport, may be linked to an alleged covert U.S. Central Intelligence Agency (CIA) program aimed at countering narcotics trafficking.⁵⁶ Some subsequent reporting connected this alleged CIA program to reported attacks on three Ecuadorian fishing vessels between January and March 2026, for which no government has taken responsibility. Surviving Ecuadorian nationals from two of the attacks claimed they were transferred to El Salvador by El Salvador's navy before being repatriated back to Ecuador.⁵⁷

El Salvador has participated in U.S.-led regional security efforts. In March 2026, President Bukele attended the Shield of the Americas Summit, a regional initiative composed of ideologically aligned Western Hemisphere governments hosted by President Trump. Days before, El Salvador's defense minister joined counterparts from the United States and 15 other Latin American and Caribbean countries to launch the Americas Counter Cartels Coalition and sign a joint security declaration stating their intent to expand multilateral and bilateral cooperation to enhance regional security and to cooperate on "border security; countering narco-terrorism and trafficking; securing critical infrastructure; and other areas as mutually determined."⁵⁸ El Salvador is also one of seven partner countries comprising the Standing Group of Partners, a U.S.-led effort to stabilize political conditions in Haiti.⁵⁹ Some U.S.-supported programs aimed at countering transnational crime through enhanced regional law enforcement cooperation and training—such as the U.S.-supported International Law Enforcement Academy (operating since 2005)—are also based in El Salvador.⁶⁰

Migration Issues

Migration flows from El Salvador to the United States have made migration a key bilateral issue. According to the U.S. Census Bureau, about 1.5 million Salvadoran-born individuals are estimated to reside in the United States.⁶¹ Of this total, more than 170,000 Salvadoran nationals (as of March 2025) have relief from removal and work authorization through Temporary Protected Status (TPS), a designation that began in 2001 following a series of earthquakes in El Salvador and was set to end on September 9, 2026, after several extensions.⁶² U.S. Citizenship and Immigration Services (USCIS) officials did not publish an official determination to extend or terminate El Salvador's TPS status prior to the September 9 deadline. That day, USCIS published the following alert on its website: "An announcement on El Salvador's TPS will be made at the appropriate time. Until such announcement is made, Salvadoran individuals present in the U.S. under TPS retain protection including work authorization."⁶³ U.S. officials have not made further announcements about El Salvador's TPS status.

Amid broader congressional debates about U.S. migration policy, some Members have called on the Trump Administration to extend TPS status for Salvadorans. Legislation introduced in the 119^th Congress would extend El Salvador's TPS designation for 18 months (H.R. 10297) or provide a pathway to lawful permanent resident status for Salvadorans and other TPS holders who have spent at least three years in the United States (e.g., H.R. 1589). Supporters of such measures have argued that Salvadoran TPS holders have made substantial contributions to the U.S. economy, that some Salvadoran TPS holders with U.S.-born children could face family separation, that returning Salvadorans may face arrest amid the Salvadoran government's ongoing state of exception, and that El Salvador is unable to adequately handle the return of its nationals.⁶⁴ Opponents of these measures have asserted that TPS extensions by successive U.S. Administrations are inconsistent with congressional intent for TPS provision, to provide a temporary safe haven for foreign nationals facing specific episodes of civil unrest, violence, or natural disasters.⁶⁵

El Salvador has been a long-standing source of unauthorized migration flows to the United States.⁶⁶ Between FY2014 and FY2023, for example, U.S. migration officials encountered an annual average of about 65,500 Salvadoran nationals at a U.S. border.⁶⁷ Such encounters have trended downward following a peak of nearly 99,000 encounters in FY2021, possibly due in part to more restrictive U.S. immigration policies and improved security conditions in El Salvador. Through the first 11 months of FY2026, U.S. officials encountered 4,112 Salvadoran nationals at a U.S. border, accounting for about 1% of total encounters.⁶⁸

U.S. Deportation of Alleged Terrorists to El Salvador

In a series of announcements between March 16 and April 13, 2025, Secretary Rubio and the State Department stated that the United States had sent approximately 300 alleged Tren de Aragua (TdA, a Venezuela-based gang) and MS-13 gang members to El Salvador to be detained in Salvadoran prisons.⁶⁹ Secretary Rubio stated that the alleged TdA gang members were sent to El Salvador in part because the Venezuelan government refused to accept them.⁷⁰ In July 2025, the Trump Administration published a set of diplomatic notes establishing the arrangement via a nonbinding instrument.⁷¹ In September, media outlets reported on a previously unreleased letter from U.S. officials providing $4.76 million in grant funding for El Salvador's law enforcement, including "costs associated with detaining the 238 TdA members recently deported to El Salvador."⁷² Some removals of alleged TdA members—which took place under a March 2025 presidential proclamation invoking the Alien Enemies Act (50 U.S.C. §§21-24)—have been challenged in federal court.⁷³

In mid-July 2025, the governments of the United States and Venezuela reportedly conducted a prisoner swap, repatriating all Venezuelan nationals held in El Salvador's prisons in exchange for the repatriation of 10 U.S. citizens and U.S. permanent residents detained in Venezuela. In a November 2025 report, two human rights groups documented that the deported Venezuelans had been subject to inhumane prison conditions, beatings, and other forms of ill-treatment while in Salvadoran prisons. The report asserted that the abuses, in many cases, "constitute torture under international human rights laws."⁷⁴

Some observers also have expressed concerns after news outlets reported that the U.S. Department of Justice may have terminated informant agreements with at least one MS-13 member in order to deport him to El Salvador at the request of President Bukele.⁷⁵ The gang member, who faced U.S. terrorism charges in 2023, reportedly was cooperating on a U.S. investigation into negotiations between the Bukele administration and the gangs.

Commercial Ties

The United States is El Salvador's top goods trading partner and a key investment partner. In 2025, U.S.-El Salvador goods trade totaled $6.9 billion. U.S. exports reached nearly $4.6 billion, driven by petroleum products and motor vehicles, and U.S. imports reached about $2.8 billion, with apparel accounting for more than 50% of total import value. The United States has run a goods trade surplus with El Salvador since 2006; that surplus stood at $2.3 billion in 2025.⁷⁶ At the end of 2025, the United States also held the second-largest foreign direct investment position in El Salvador at $2.4 billion, behind Panama, according to Salvadoran central bank figures.⁷⁷ In August 2026, the State Department stated that it planned to host a bilateral economic summit to advance shared economic interests.⁷⁸

The United States and El Salvador are parties to the Dominican Republic-Central America-United States Free Trade Agreement (CAFTA-DR; implemented by P.L. 109-53), which was signed in 2004 and entered into force for El Salvador in 2006. This comprehensive free trade agreement eliminated tariff and nontariff trade barriers, building on unilateral U.S. trade preferences begun under the 1983 Caribbean Basin Initiative, and established rules for services, intellectual property rights, and investment, among other issues.⁷⁹ During the second Trump Administration, U.S. imports of Salvadoran goods have faced tariffs notwithstanding CAFTA-DR. From early April 2025 to late July 2026, pursuant to several laws, President Trump imposed tariffs on most U.S. goods imports (including a 10% tariff on goods from El Salvador), aimed in part at addressing "structural asymmetries" in U.S. trade relationships.⁸⁰

In January 2026, both countries signed a nonbinding reciprocal trade agreement intended to "complement" CAFTA-DR provisions.⁸¹ According to some analysts, the agreement would, inter alia, reinstate duty-free treatment for some U.S. imports from El Salvador, including textiles and apparel under CAFTA-DR, and provide nondiscriminatory market access in El Salvador for U.S. agricultural goods.⁸² The agreement also includes provisions on intellectual property rights, investment security and export controls, prohibitions on goods made with forced labor, and digital services, among other measures. Nevertheless, some U.S. imports from El Salvador continue to face additional tariffs. In July 2026, the U.S. Trade Representative (USTR) imposed tariffs, with some exceptions, on goods imported from 60 economies, including El Salvador, after an investigation into the countries' alleged "failure to impose and effectively enforce a prohibition on the importation of goods produced with forced labor."⁸³ El Salvador faces a 10% tariff rate, compared with 12.5% imposed on other investigated countries, in part due to commitments made in the January 2026 trade agreement related to prohibiting the importation of goods made with forced labor. USTR included Salvadoran textile and apparel imports among the products exempted from the 10% tariffs.

Footnotes