El Salvador - Country Commercial Guide
Market Overview

Discusses key economic indicators and trade statistics, which countries are dominant in the market, and other issues that affect trade.

Last published date: 2021-11-04

The United States is El Salvador’s main trading partner. In 2020, U.S. exports to El Salvador totaled about USD $2.6 billion, and El Salvador’s exports to the United States were USD $1.9 billion, registering a decrease since 2019.  GDP in 2020 was USD $25 billion, of which 61.5% was in services, 14.9% in manufacturing, and 5.1% in agriculture. A partial list of U.S. companies with market presence includes: Abbott Laboratories, AES Corp, American Airlines, AT&T Inc., Caterpillar, Citibank, Hanesbrands, Cisco, Delta, FedEx, General Electric, General Motors, John Deere, Kimberly-Clark, Microsoft, PriceSmart, SBA Communications, United, Walmart, Xerox, 3M, and many others, as well as dozens of U.S franchises. There are 194 U.S. subsidiaries in El Salvador, from 111 U.S parent companies. El Salvador’s proximity to the United States gives it a strategic location and elevates its position as a regional hub for Central America. El Salvador is a highly receptive market for U.S. products and services, and the economy is predominantly services-based.

U.S. companies exporting to El Salvador benefit from the Central America-Dominican Republic Free Trade Agreement (CAFTA-DR) with zero percent duties on U.S. consumer and industrial goods. CAFTA-DR entered into force on March 1, 2006 and has contributed to dramatic increases in the United States’ bilateral trade with El Salvador and broader trade throughout the region. Also, El Salvador’s dollarized economy eliminates foreign exchange risk and lowers transaction and financial costs. On June 5, 2021 President Bukele announced that bitcoin would become a legal tender in El Salvador alongside the dollar. The Bitcoin Law was passed on June 8, to take effect on September 7, 2021. This included a requirement for businesses in El Salvador to accept bitcoin for payments.

President Nayib Bukele was elected in 2019, and his Nuevas Ideas political party gained a super majority in the Legislative Assembly in 2021. There have been a number of recent legislative changes in El Salvador that undermine judicial independence and remove a critical counterbalance on the executive branch, raising serious concerns over the separation of powers and the rule of law and thus creating a less stable environment in which to do business.