For most of President Ronald Reagan's first term, U.S.-Cuban relations were frozen. But late in 1984, an agreement was reached between the two countries. Cuba would take back more than 2,700 Cubans who had come to the United States in the Mariel because of criminal or psychiatric disqualification. Castro canceled the agreement when the U.S. began the Radio Marti broadcasts in May 1985 to bring a non-Communist viewpoint to the Cuban people.

With the collapse of communism in eastern Europe, Cuba's foreign trade plummeted as did aid from Russia, producing the worst economic crisis in the island's history. The government moved slightly toward a mixed economy in 1993 by permitting limited private enterprise in a number of trades and services and allowing Cubans to possess convertible currencies. In March 1996, the U.S. passed the Helms-Burton Act, which further extended the U.S. trade embargo on Cuba by penalizing non-U.S. companies doing business with Cuba. Reaction to the measure was widespread international condemnation that included the U.S.'s North American neighbors, Canada, Mexico, and the Caribbean nations. Christmas was declared an official
holiday in Cuba in 1997, for the first time since the revolution, in preparation for Pope John Paul II's historic visit to Cuba in Jan. 1998. By Castro's allowing the pope's visit, he raised hopes that the gesture signaled a new openness, easing of restrictions, and increased religious freedom for Cubans.

In mid-1999, the U.S. sent negotiators to Havana to begin talks on better communication between the U.S. and Cuba regarding drug shipments in the Caribbean, despite protests from some Cuban-Americans. The U.S. government stated that the action was not part of an effort to normalize relations with Cuba.