Understanding USMCA and the 25% Tariffs on Canadian and Mexican Goods 

Updated on August 14. Originally written March 14, 2025

Summary:

In March 2025, conflicting reports suggested that U.S. tariffs on goods from Canada and Mexico were being paused, but in reality, most products remain subject to tariffs unless they qualify under the U.S.-Mexico-Canada Agreement (USMCA). To claim USMCA benefits, goods must meet strict Rules of Origin requirements and include proper documentation with nine specific data elements. Without meeting these criteria, tariffs still apply—often catching merchants off guard. Given the complexity and risks of incorrect claims, ecommerce sellers should carefully verify eligibility and maintain complete records to avoid costly penalties and ensure compliance with evolving trade regulations.

Intro

In March 2025 there was a lot of conflicting reports about tariffs being paused on goods with an origin of Canada or Mexico to the U.S. If you are an ecommerce merchant shipping from these countries, it sounds like good news. However, the reality is that tariffs are still in effect for most goods, with only a limited exemption for those that qualify under the U.S.-Mexico-Canada Agreement (USMCA). With tariff implementation changing every day, it’s essential to stay up to date on what is officially happening with tariffs and trade.  

What Makes Goods USMCA Eligible? 

USMCA is a Free Trade Agreement (FTA) among the United States, Canada, and Mexico. For the United States, rules and regulations are provided for in the United States Harmonized Tariff Schedule (HTSUS) in General Note 12 by the United States International Trade Commission (USITC). For a product to enjoy duty and preferential treatment under a FTA, it must go through two key steps: Qualification or Solicitation and Documentation Certification. 

Qualification or Solicitation 

If the shipper manufactured the commodity they’re shipping, they must ensure that their products qualify and are eligible, based on the Rules of Origin (ROOs), for the specified FTA. Rules of Origin are outlined in the FTA schedule notes, listed by HS code in the section of General Notes; General Rules of Interpretation; General Statistical Notes section. Each product will have a specific Rule of Origins that it has to meet and needs to be reviewed on a product to product basis. Examples of ROOs include:  

• Wholly obtained: Products entirely grown, harvested, or extracted in the origin country. Examples include agricultural products, minerals, and fish harvested within these territories. 
• Exclusively from originating materials: Goods produced entirely within the region using materials that are already considered originating. 
• 35% appraised value method: If a product does not qualify under wholly obtained rules, it may still qualify if a minimum percentage of its value was added within the region. 
• Tariff shift: Goods that undergo a transformation where their Harmonized System (HS) classification changes due to processing within the region. This applies when non-originating components have been sufficiently altered to qualify as originating. 
• Regional Value Content (RVC): A percentage-based requirement where a certain proportion of the good’s value must come from within the region. This can be calculated through different methods, such as net cost or transaction value calculations. 
• Combined Tariff Shift and RVC: Many products must meet both a tariff shift rule and an RVC percentage to qualify. 

If the shipper isn’t the direct manufacturer of an item, they will need to solicit certificates from the manufacturers. A Manufacturer’s Affidavit, Certificate of Origin or other legal documents must be acquired to confirm the goods qualify. If a business manufactures the goods, they must conduct an internal review to confirm that production aligns with USMCA requirements.  

Documentation Certification 

Once a product is deemed eligible, the proper documentation must be included to support the USMCA claim. Often this takes the form of a statement on the shipping invoice including the nine minimum data elements outlined in USMCA Annex 5-A: 

• Importer, Exporter, or Producer Certification of Origin   
• Certifier   
• Exporter   
• Producer   
• Importer   
• Description and HS Classification of the Good   
• Origin Criteria (this will be the specific ROO used to deem eligibility) 
• Blanket Period (if applicable) – Most qualifications last for a year or less; some are on a per shipment basis 
• Authorized Signature and Date 

Without confirming that the products both qualify, and the shipment includes the appropriate document certification, the goods do not qualify for USMCA treatment. The 2o25 US tariffs will still apply. Check out the Trade and Tariff Hub for exact amounts of tariffs on Canada and Mexico. 

What is the Process for Claiming USMCA Exemptions?

To claim duty-free treatment under USMCA, merchants must first verify their product’s eligibility based on the HTS (Harmonized Tariff Schedule). If they manufacture the goods, they need to confirm that production aligns with the USMCA requirements. If they are resellers or distributors, they must obtain proof of origin from manufacturers.  

Once eligibility is confirmed, the shipment must include proper documentation. This includes nine specific data elements outlined in USMCA Annex 5-A, such as certifier details, importer and exporter information, and a clear declaration of origin. The latest Cargo Systems Messaging Service notifications on USMCA exemptions outline that to qualify the invoice must include HTSUS classification 9903.01.04. This is for both Mexico and Canada if importing into the United States. 

All information must be provided electronically on an invoice or other document.  

What are the Risks of Incorrectly Claiming USMCA Eligibility?

Improperly claiming a USMCA exemption can result in serious consequences. U.S. Customs and Border Protection (CBP) enforces these regulations strictly, and merchants who misrepresent their goods can face fines, penalties, and even the seizure of shipments. Businesses should ensure they fully meet all USMCA requirements before making a claim to avoid these risks. 

Why Will Most Goods Still Be Subject to Tariffs?

Qualifying for USMCA is not a simple process, and many merchants will find that their products do not meet the criteria. Even if goods originate or ship from Canada or Mexico, they may still be subject to the 2025 US tariff if they do not meet the underlying Rules of Origin for the product (such as the required transformations or regional value content thresholds). This means that for most businesses, tariffs will continue to be a factor when importing from these countries. 

Understanding and adhering to trade regulations is crucial for avoiding unexpected costs and penalties. Merchants should work with trade compliance experts or cross-border partners to verify eligibility before claiming USMCA benefits.  

Keep up to date with the latest changes on our Trade and Tariff Hub.