USMCA (United States–Mexico–Canada Agreement)

USMCA (United States–Mexico–Canada Agreement) is the free-trade agreement that replaced NAFTA on July 1, 2020. It provides duty-free trade among the three member countries for goods that satisfy USMCA's product-specific rules of origin. The same agreement is called CUSMA in Canada and T-MEC in Mexico.

What changed from NAFTA. USMCA tightened automotive origin rules (Regional Value Content raised from 62.5% to 75% for passenger vehicles; new 70% steel and aluminum content requirement; new Labour Value Content test of 40–45% of vehicle content made by workers earning above $16/hour); added a digital-trade chapter; updated dispute settlement and intellectual-property protections; and increased the de minimis thresholds for express shipments between the US and Canada/Mexico.

How to claim USMCA preference. Importers self-certify origin via the USMCA Certification of Origin — there is no government-issued form. The certification must contain nine required data elements (importer/exporter/producer name, certifier, description of goods, HS code, origin criterion, period covered, signature/date) and can be on the commercial invoice or a separate document. Records must be kept for at least 5 years.

USMCA carve-outs that matter in 2026. Several US tariff regimes have specific USMCA provisions:

• Section 232 auto: finished vehicles and covered auto parts that genuinely meet USMCA rules of origin (including the steel/aluminum and labour-value tests) are exempt from the 25% Section 232 auto tariff. Parts that fail USMCA qualification revert to the full 25%.
• Section 232 steel/aluminum: Mexico and Canada have shifting quota arrangements; verify current Federal Register notices.
• IEEPA fentanyl tariffs (Canada/Mexico): imposed in February 2025; subsequent carve-outs for USMCA-qualifying goods have been narrow and frequently amended.
• Section 321 de minimis: USMCA raised the de minimis threshold for shipments from the US into Canada to CAD 150 (duties) and CAD 40 (taxes), and raised the threshold for shipments from Canada/Mexico into the US.

2026 review. USMCA contains a "joint review" mechanism: the parties must jointly confirm continuation every 6 years (first review in 2026). If any party does not confirm, the agreement enters a 10-year wind-down. The 2026 review is the most consequential trade-policy event in the region this decade and has been scheduled following finalization of bilateral negotiations on Section 232, IEEPA carve-outs, and labour enforcement under the Rapid Response Mechanism.

Practical takeaway. If you source from Mexico or Canada, USMCA qualification is the difference between a 0% tariff and a stack of 25%+ Section 232/IEEPA. Document origin per part, prove steel/aluminum and labour-value content for autos, and file the USMCA Certification on every entry.