President Donald Trump has withdrawn benefits for Rwanda to export apparel duty-free to the US under the African Growth and Opportunity Act (Agoa).
In March, the Trump administration had threatened to review Kigali's status in 60 days after the latter banned importation of used clothes and shoes.
"The President, therefore, has decided to suspend Rwanda's duty-free access to the United States for apparel products until Rwanda comes back into compliance with Agoa's eligibility requirements," the deputy US Trade Representative CJ Mahoney said in a statement on Monday.
"We regret this outcome and hope it is temporary.
"If the Agoa eligibility criteria are to have any meaning, they have to be enforced-particularly where, as here, other Agoa members took action in order remain in compliance," he said adding that Trump's action was "measured and proportional".
Rwanda increased tariffs on imported used clothes in 2016 with the aim of boosting its local textile industry and eventually phase out second-hand apparel.
The planned phased out was to be implemented by East African Community member countries.
But Kenya, Tanzania and Uganda abandoned the joint position after threats by the US to review their Agoa status.
Despite the suspension, Rwanda will remain eligible to receive non-apparel benefits under Agoa.