Insights

Just two days after the tariffs on all Mexican and Canadian products became effective, on March 6, President Trump announced amendments to the tariffs against Mexico and Canada “to minimize disruption to the United States automotive industry and automotive workers.” Specifically, the amendments provide that the tariffs would not apply to goods that qualify for preferential treatment under the United States-Mexico-Canada Agreement (USMCA). The amendments also lowered the duty rate for non-qualifying imports of potash from Canada and Mexico. (For background on the tariffs and retaliation, see our earlier article, U.S. Implements New Tariffs on Canada, Mexico, and China.)

Given the back and forth on tariffs, on March 8, U.S. Customs and Border Protection (CBP) released an official “Statement on Tariffs” to clarify the current tariff situation related to the International Emergency Economic Powers Act (IEEPA) tariffs on Mexico, Canada, and China. The Statement confirmed the following:

• Effective March 7, 2025, no additional tariffs are due on goods from Canada and Mexico that qualify for the USMCA preference.
• Additional 25% tariffs on goods that do not satisfy USMCA rules of origin. 

• A lower, additional 10% tariff on energy products imported from Canada that fall outside the USMCA preference. 

• A lower, additional 10% tariff on potash imported from Canada and Mexico that falls outside the USMCA preference. 

• 20% on goods from China and Hong Kong (increased from 10% on March 4). 

USMCA Qualification

Although the exclusion of USMCA goods from the tariffs was largely reported by various media sources as a “suspension” or “reversal” of the tariffs, trade professionals know that qualification for duty-free treatment under the USMCA requires more than a product being merely “from” Mexico or Canada. According to press reports citing a senior administration official, presently only about 50% of imports from Mexico and 38% of imports from Canada qualify for USMCA.

The rules that govern whether a product qualifies for USMCA preferential treatment are found in 19 C.F.R. § 182. Briefly, verifying that a good qualifies as USMCA-originating generally requires the following steps:

1.  USMCA Rules of Origin

• The good must meet one of the following criteria outlined in the USMCA:
  • Criterion A: Wholly obtained or produced entirely in the USMCA region.
  • Criterion B: Produced in the USMCA region using non-originating materials that meet product-specific rules of origin.
  • Criterion C: Produced entirely from originating materials within the USMCA region.
  • Criterion D: Meets specific regional value content (RVC) thresholds or unassembled goods requirements.
  • Criterion E: Specific provisions for certain goods.

2.  Certificate of Origin

• The exporter, producer, or importer must complete a USMCA certificate of origin, which must include:
  • Certifier's identity (name, title, address, contact details);
  • Exporter, importer, and producer identities;
  • Description of the goods and their Harmonized System (HS) tariff classification to the six-digit level;
  • The applicable Rules of Origin criterion (A-E);
  • Blanket period in the case of multiple shipments (up to 12 months); and
  • Authorized signature and date.

3.  Recordkeeping

• Importers relying on the USMCA origination should maintain the following documentation supporting the claim for USMCA preferential treatment for at least five years:
  • Records and supporting documentation related to the importation;
  • All records and supporting documents related to the origin of the good (including any certifications or copies thereof); and
  • Records and supporting documentation necessary to demonstrate compliance with the transit and transshipment provisions of the USMCA.

Examples of documents to maintain include certificates of origin, production records, bills of materials, supplier declarations, and other relevant documents. CBP can verify USMCA originating claims through requests for additional information or documentation or on-site visits to inspect production processes.

Importantly, if the importer fails to demonstrate the goods qualify for USMCA, then duties will be owed on the importation, and there is also potential for penalties. Importers should exercise reasonable care and maintain all records and analysis supporting USMCA eligibility.

Potash

The recent revisions to the tariff actions also include a lower 10% duty for potash that does not qualify for the USMCA. Potash is a term for minerals rich in potassium, and it is a major ingredient in agricultural fertilizer.

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The tariff situation is constantly evolving. If you have any questions about the tariffs on Canadian, Mexican, and Chinese goods, qualification for USMCA preferential treatment, or U.S. Customs compliance generally, please do not hesitate to reach out to the team at Torres Trade Law.