USMCA COMPLIANCE & ORIGIN ANALYSIS
Stay Ahead of Compliance Risks & Protect your Business
Tariff risks are real—misclassifying origin under USMCA can mean costly penalties. With stricter enforcement, an Origin Analysis ensures compliance and prevents unexpected duties while optimizing costs through preferential treatment.
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Steps to Verify your Product's Eligibility
Determine if your product qualifies for benefits under a specific agreement, such as USMCA. Review the Rules of Origin to confirm coverage and key requirements.
Analyze materials and production steps to ensure compliance. Check for tariff shifts, regional value content, or required processes based on the agreement.
Consult trade compliance professionals to clarify complex rules, avoid common mistakes, and strengthen your origin validation process.
What is an Origin Analysis?
A deep review of your Bill of Materials (BOM) and supply chain with binational customs brokers. Assess compliance with USMCA rules of origin to prevent unexpected tariffs and supply chain disruptions.
Strategic Alternatives for Non-Qualifying Products
Supply Chain Adjustments
Tariff Engineering Strategies
Alternative Trade Programs
Why Verifying Origin Matters Under the USMCA?
Under the USMCA, proper application can offer a major competitive advantage.
WHY ACT NOW?
- Tariff enforcement is increasing - avoid retroactive duties
- Supply chains are changing - review origin impacts on cost and compliance
- Non-compliance leads to fines and reputation damage
- Customs audits are becoming more frequent - choose a proactive analysis
Understanding the
Rules of Origin
Overview of the Rules of Origin
RULES OF ORIGIN?
Rules of Origin in the USMCA are the criteria used to determine whether a product qualifies as originating in North America and is therefore eligible for preferential tariff treatment under the agreement.
For certain products, the annex stipulates a minimum percentage of the product's value that must originate from within the USMCA countries. This criterion is used to assess the extent of regional economic contribution to the final product.
Types of Rules of Origin
PREFERENTIAL TREATMENT?
Applies under Free Trade Agreements (like USMCA, EU-Mexico FTA, or CPTPP), allowing reduced or zero tariffs. Under USMCA, if products meet the agreement's requirements, they may enter with a 0% tariff.
These are used outside of FTAs, and are applied for general customs purposes. They help determine the origin in order to apply the MFN tariff rates, for trade remedies, import quotas, or labeling requirements.
Determination Criteria
PREFERENTIAL TREATMENT
Wholly Obtained or Produced: good entirely sourced and produced within the FTA region (ex: natural resources, agriculture, etc)
Tariff Shift: non-originating inputs must undergo a change in their HS code during production
Regional Value Content (RVC): certain percentage of product's value must originate within the FTA region
Specific Processing or Manufacturing Operations: rule may apply to specific production steps (ex: assembly, weaving, mixing, etc)
Wholly Obtained or Produced: goods entirely sourced and produced within the FTA region (ex: natural resources, agriculture, etc)
Substantial Transformation: product must undergo a process that gives it a new name, character or use (ex: turning raw coffee beans into roasted, packaged coffee)
Certificate of Origin
A Certificate of Origin (CO) is a key document used in international trade to certify the country where a product was made. Customs authorities use it to apply the correct tariffs, quotas, and trade rules.
UNDER USMCA
Under USMCA, no formal certificate is required. Exporters, producers, or importers can self-certify using a written declaration. Mistakes can lead to denied benefits, penalties or back duties, and loss of Trusted Trade status, among others.
4 TYPES OF TARIFFS AFFECTING MEXICAN EXPORTS TO THE U.S.
- Implementation: On April 5, 2025, the U.S. imposed a 10% baseline tariff on imports from most countries under the International Emergency Economic Powers Act (IEEPA).
- Exclusions: Mexico and Canada are exempt from this 10% tariff for goods that comply with the U.S.-Mexico-Canada Agreement (USMCA). Section 232 goods are not subject to reciprocal tariffs.
- Implications: Mexican goods that do not meet USMCA requirements remain subject to existing tariffs, such as the 25% tariff on certain products.
Effective Date: Since March 4, 2025, a 25% tariff has been imposed on specific imports from Mexico.
Exceptions:
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USMCA Compliance: Goods that meet USMCA rules of origin are exempt from this tariff.
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U.S. Origin Retention: Products manufactured in the U.S. and sent to Mexico for minor processing retain their U.S. origin and are not subject to the 25% tariff upon re-entry.
- De Minimis: shipments worth less than $800 U.S. dollars are allowed.
There is no drawback, meaning there is no refund if the goods are re-exported within one year.
Steel & Aluminum: Proc 10896 & 10895
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Tariff Rate: A 25% tariff applies to steel and aluminum imports from all countries, including Mexico, effective March 12, 2025.
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USMCA Status: These tariffs remain in effect despite the USMCA; the previous exemption agreement was revoked.
- Reciprocal Tariffs: goods subject to Secx 232 tariffs are exempted from IEEPA Reciprocal Tariffs (IEEPA Country of Origin tariffs will still apply)
Automotive: Proc 10908
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Tariff on Vehicles: A 25% tariff on imported finished vehicles was implemented on April 3, 2025.
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Tariff on Components: A 25% tariff on certain automotive parts, including engines and transmissions, is scheduled to take effect no later than May 3, 2025.
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USMCA Considerations: Vehicles and parts that meet USMCA origin requirements may be eligible for exemptions or reductions.
*There will be no tariffs on auto goods entered into the U.S. under USMCA preferential treatment until Commerce establishes process (via Federal Register Notice) to apply the tariff exclusively to the value of the non-U.S. content.
There is no drawback, meaning there is no refund if the goods are re-exported within one year.
- Standard Rates: Under World Trade Organization (WTO) rules, the U.S. imposes a 2.5% tariff on passenger cars and a 25% tariff on pickup trucks from countries without a free trade agreement.
- Cumulative Tariffs: If USMCA preferences are not claimed, these MFN tariffs apply in addition to any other applicable duties.
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Detailed Report on Compliance Risks and Opportunities
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