USMCA vs NAFTA: What Changed and How It Affects Your Imports
The United States-Mexico-Canada Agreement (USMCA) replaced NAFTA on July 1, 2020, but years later many importers still aren't fully using its preferential duty rates. If you're importing from Mexico or Canada and paying full MFN duties, you might be leaving money on the table.
Key Differences: USMCA vs NAFTA
| Feature | NAFTA | USMCA |
|---|---|---|
| Auto Rules of Origin | 62.5% regional content | 75% regional content |
| Steel/Aluminum | No requirement | 70% North American steel/aluminum for autos |
| Labor Provisions | Side agreement, weak | Core chapter, enforceable |
| Digital Trade | Not covered (1994) | Full chapter, duty-free digital goods |
| IP Protection | 10 years biologics | 0 years (removed at Canada's request) |
| Sunset Clause | None | 16 years, reviewed every 6 |
| Currency Manipulation | Not addressed | Enforceable provisions |
| De Minimis (Canada) | C$20 | C$150 (duty-free), C$40 (tax-free) |
Rules of Origin: The Most Important Part
To qualify for USMCA's preferential (often zero) duty rates, your product must meet rules of origin — proving it was substantially made in North America. The rules vary by product, but generally require:
- Tariff shift: The raw materials must be classified under a different HTS heading than the finished product
- Regional value content (RVC): A minimum percentage of the product's value must originate in the US, Mexico, or Canada
- Product-specific rules: Some products have unique requirements (autos are the most complex)
How to Claim USMCA Rates
- Determine eligibility. Check if your product qualifies under the product-specific rules of origin
- Obtain a certification of origin. Unlike NAFTA's official form, USMCA allows any format — even an email — as long as it contains 9 required data elements
- Declare on customs entry. Claim the "Special" rate (shown as the USMCA rate on your HTS lookup)
- Keep records. You must retain supporting documentation for 5 years
The 2026 Review
USMCA's first mandatory joint review is scheduled for 2026. All three countries must confirm they want to extend the agreement for another 16 years. While extension is expected, the review may result in modifications — particularly around digital trade rules, environmental provisions, and the auto rules of origin that many manufacturers have struggled to meet.
Common USMCA Mistakes
- Not claiming it at all. Many small importers don't know USMCA rates exist and pay full MFN duties on Canadian/Mexican goods
- Incomplete certifications. Missing any of the 9 required elements invalidates the claim
- Assuming all products qualify. Some products from Mexico/Canada don't meet the rules of origin and must pay MFN rates
- Ignoring the 2026 surcharge interaction. Check whether the new import surcharge applies on top of USMCA rates for your product category