With recent tariff changes making USMCA qualification more economically significant than ever, knowing how to secure duty-free treatment for your North American trade has become critical. The stakes are high, U.S. tariff rates have jumped from 2.3% to 13.1% between 2024 and 2025, making USMCA compliance a major cost-saving opportunity.
This guide explains in detail what a product “originating” means under USMCA rules, what paperwork you need, and how to avoid common mistakes that could cost your company thousands of dollars in extra duties.
USMCA vs. NAFTA: What Changed in 2020
The United States-Mexico-Canada Agreement (USMCA) replaced NAFTA on July 1, 2020, modernizing the 25-year-old trade agreement with major updates to:
- Rules of origin, stricter requirements for qualifying products
- Labor provisions, enhanced worker protections, and standards
- Digital trade, new frameworks for the digital economy
The three countries negotiated the new agreement to address technological changes, strengthen intellectual property protections, and update automotive content requirements. For businesses, the most impactful changes involve stricter rules of origin, especially in the automotive sector.
According to the U.S. Trade Representative, the percentage of vehicles imported from Canada or Mexico for which duties were paid increased from 0.5% in 2019 to 8.2% in 2023. This represents a jump from $517 million to $8.9 billion in value as stricter USMCA requirements took effect.
USMCA Origin Rules (The Simple Version)
For your products to qualify for duty-free treatment, they must be considered “originating” under USMCA rules. There are four main pathways to qualification, and knowing each is key for maximizing your duty savings. Let’s break down each qualification method:
100% North American Products
The simplest qualification path applies to goods wholly obtained or produced entirely within the territories of the United States, Mexico, or Canada.
Within this group are minerals mined in North America, crops grown and harvested there, and fish caught in territorial waters. It also covers goods produced exclusively from these wholly-obtained materials.
Products Made from Already-Qualifying Materials
Products made entirely from materials that are already considered to be originating can be duty-free eligible.
This creates a chain of origin where final products inherit the originating status of their components. However, you must maintain documentation proving the originating status of all materials used.
Transforming Foreign Materials Into Qualifying Goods
Products that undergo sufficient processing in North America to satisfy certain tariff shift requirements may even be eligible even if they contain non-originating materials.
A tariff shift occurs when processing transforms a non-originating input into a different product classification. For example, importing plastic pellets (one classification) and manufacturing them into automotive parts (a different classification) may qualify the final product.
Regional Content Minimums
Many products must meet Regional Value Content (RVC) requirements, specifying the minimum percentage of North American content.
Passenger vehicles are required to contain 75% North American content as of 2024, a significant increase from the 62.5% required under NAFTA. The automotive sector is subject to particularly stringent requirements.
With Canada announcing 25% retaliatory tariffs covering up to $155 billion of U.S. goods by March 4, 2025, after an initial scope of $30 billion, the cost of non-compliance has never been higher.
USMCA Origin Certification: No More Fixed Forms
One of the most welcome changes from NAFTA is the elimination of the mandatory certificate of origin form. Under USMCA, certification can be provided on any document, including a commercial invoice, as long as it contains all required elements.
This versatility enables exporters, producers, and importers to establish their certification format. However, while the form is flexible, the content requirements remain strict.
The 9 Required Data Points
Every USMCA certification must include these nine mandatory elements:
- Indication of whether the certifier is the exporter, producer, or importer
- Certifier’s name, address, and contact information
- Exporter’s name, address, and contact information (if different from certifier)
- Producer’s name, address, and contact information (if different from certifier/exporter)
- Importer’s name, address, and contact information (if known)
- Description and HS tariff classification of the goods
- Origin criteria under which the good qualifies
- Blanket period (if certification covers multiple shipments)
- Authorized signature and date
Making Your USMCA Claim
To claim USMCA preferential treatment, you must take specific steps when importing goods:
- Make sure you have a valid certification of origin before importation
- Include the appropriate Special Program Indicator (SPI) code on your entry documentation:
- “S” for goods from Canada
- “S+” for goods from Mexico
Your customs broker must annotate these codes on entry documents to signal USMCA eligibility. At EP Logistics, our licensed customs brokers handle this critical step to ensure your shipments receive the duty-free treatment they deserve.
Documents You Need to Keep (And For How Long)
Maintaining proper documentation is non-negotiable under USMCA rules. You must keep all records related to importation for at least five years from the date of importation.
These records include:
- Certification of origin
- All supporting documentation proving originating status
- Bills of lading and other shipping documents
- Commercial invoices and purchase orders
- Production records (for producers)
Customs authorities can request these documents during verification audits, and failure to provide them can result in denied preferential tariff treatment and potential penalties.
Costly Mistakes You Can Dodge
Assuming All North American Products Automatically Qualify
Perhaps the most expensive misconception is that any product from Mexico or Canada automatically qualifies for duty-free treatment. In reality, only goods meeting specific origin criteria qualify.
With Canada announcing 25% retaliatory tariffs on $155 billion of U.S. goods starting March 4, 2025, in response to U.S. tariffs on non-USMCA-compliant products, the cost of non-compliance has never been higher.
Misclassifying Products
When the wrong rules of origin are applied due to incorrect Harmonized System (HS) classifications, otherwise eligible goods may be disqualified.
The average MFN tariff rates vary dramatically by product group: 2.5% for passenger cars, 7% for trucks, and 2.3% for auto parts, making accurate classification crucial for determining duty savings (Federal Reserve).
Ignoring Transshipment Rules
Products shipped through non-USMCA countries must remain under customs control and undergo no production operations in those countries. Violating these rules disqualifies goods from preferential treatment.
How EP Logistics Makes USMCA Compliance Easier
Navigating USMCA requirements doesn’t have to be overwhelming. EP Logistics specializes in simplifying cross-border trade compliance through our comprehensive customs brokerage services.
Our team of licensed customs brokers in both the U.S. and Mexico provides expert guidance on:
- Determining product eligibility under USMCA rules
- Preparing accurate certification documentation
- Making sure proper entry filing with correct SPI codes
- Maintaining required records for verification
- Responding to customs authority inquiries
Our cross-border expertise and established relationships with producers throughout North America enable us to facilitate this critical information exchange, making sure your shipments qualify for duty-free treatment without the headaches.
Maximize Your USMCA Benefits with Expert Guidance
Qualifying for USMCA duty-free treatment requires knowing specific origin rules, maintaining proper documentation, and avoiding common compliance pitfalls. With tariff rates rising and enforcement increasing, the financial implications of USMCA qualification have never been more important.
By following the guidelines in this article and working with experienced customs professionals, you can navigate USMCA requirements confidently and maximize your duty savings across North American trade.
Ready to optimize your USMCA compliance strategy? EP Logistics’ trade compliance experts can help you navigate complex origin requirements, ensure proper documentation, and maximize your duty-free opportunities. Contact us today to streamline your North American trade operations and protect your bottom line.
