Everything about the USMCA: how to leverage preferential tariffs between Mexico, the US, and Canada with rules of origin, regional content, and proper certification.
The United States-Mexico-Canada Agreement (USMCA), known in Mexico as T-MEC (Tratado entre México, Estados Unidos y Canadá), is the trilateral trade agreement that entered into force on July 1, 2020, replacing the North American Free Trade Agreement (NAFTA) that had operated since 1994. The USMCA updates regional trade rules to reflect 21st-century economic realities, with significant changes in intellectual property, digital trade, automotive rules of origin, labor practices, and environmental protections.
For importers and exporters, the USMCA represents both opportunities and obligations. On one hand, it allows originating goods to circulate with preferential tariffs (generally 0%) among the three countries. On the other hand, it demands rigorous compliance with rules of origin and associated documentation. Erroneously declaring a good's origin can result in loss of preferential treatment, retroactive tariff collection, and administrative penalties.
Trilateral trade among Mexico, the US, and Canada exceeds USD 1.6 trillion annually (2025), making this one of the world's most integrated trading regions. Mexico has been the United States' largest trading partner since 2023, surpassing China.
USMCA rules of origin determine which goods qualify as originating in the region and can therefore benefit from preferential tariffs. Their purpose is to ensure that only products genuinely produced or transformed in North America enjoy the agreement's benefits, preventing third countries from shipping products through Mexico, the US, or Canada solely to take advantage of preferential tariffs (known as transshipment or circumvention).
The vast majority of manufactured products qualify under the third criterion: the product-specific rule of origin. These rules vary enormously from one product to another. Some products only require a chapter-level tariff change (CC), others require a heading-level change (CTH), and others demand a minimum regional value content (RVC). Knowing the applicable rule for your product is the first step in determining whether it qualifies as originating.
Regional value content (RVC) is the percentage of a product's value attributable to the North American region. It is one of the most commonly used criteria for determining origin of manufactured goods. The USMCA establishes two main methods for calculating it, and the exporter may choose whichever is more favorable.
Formula: RVC = ((TV - VNM) / TV) x 100, where TV is the transaction value of the product and VNM is the value of non-originating materials. This method is simpler to apply when good cost traceability exists. It generally requires a minimum RVC of 75% for most products.
Formula: RVC = ((NC - VNM) / NC) x 100, where NC is the net cost of the product (total cost minus sales promotion costs, royalties, shipping containers, and non-allowable interest expenses) and VNM is the value of non-originating materials. This method is mandatory for automotive products and optional for others. It generally requires a minimum RVC of 50% under net cost.
A company in Queretaro manufactures an electronic product with a transaction value of USD 100. It uses components imported from China for USD 20 and components from the US for USD 30. VNM = USD 20 (only China components). RVC = ((100 - 20) / 100) x 100 = 80%. This exceeds the required 75%: it qualifies as originating under USMCA.
It is essential to maintain detailed records of the origin of each material and input used in production. Suppliers within the region should provide origin declarations or certificates supporting the origin of their materials. Without this documentation, materials are considered non-originating for RVC calculation purposes, which may prevent the final product from reaching the required minimum percentage.
The automotive sector is where the USMCA introduced the most dramatic changes from NAFTA. The new rules aim to increase production and employment in North America, particularly in Mexico and the United States, and reduce dependence on components from outside the region.
USMCA automotive rules have triggered a significant restructuring of supply chains. Companies that previously imported components from Asia are now seeking North American suppliers to meet RVC percentages. This has benefited Mexican auto parts manufacturers but has also increased costs for assemblers.
Unlike NAFTA, which used an official format (Certificate of Origin), the USMCA allows self-certification of origin. This means the exporter, producer, or importer can certify on their own that the goods comply with the rules of origin, without needing an official format issued by a government authority.
The origin certification can be included on the commercial invoice, in a separate document, or as an electronic declaration. It must contain at minimum nine mandatory data elements identifying the certifier, exporter, producer, importer, goods description, tariff classification, applicable origin criterion, and the certification's validity period.
The certifier must maintain records supporting the origin certification for a minimum of 5 years from the certification date. This includes records of material purchases, production costs, supplier correspondence, and any other documents demonstrating compliance with the applicable rule of origin.
Customs authorities in all three countries may verify whether a good truly complies with USMCA rules of origin. The US conducts these verifications through CBP (Customs and Border Protection), Mexico through SAT, and Canada through CBSA. The process may be initiated by random selection, risk analysis, or as a result of a post-clearance audit.
If verification determines that the good does not qualify as originating, the authority may deny preferential treatment and collect the corresponding tariffs with surcharges. In cases of fraud or false origin declarations, additional penalties may be imposed. The importer has the right to a hearing and may challenge the determination through applicable administrative procedures.
“Origin certification is not a mere bureaucratic formality: it is a sworn declaration that the goods meet the treaty's rules. Treating it with the seriousness it deserves is the best protection against customs contingencies.”
— National Association of Importers and Exporters of Mexico (ANIERM)
Accumulation is a principle that allows materials produced in any of the three USMCA countries to be considered originating. This means that if a product is manufactured in Mexico with components from the United States and Canada, all those components are considered originating for RVC calculation purposes. Accumulation is fundamental for North America's integrated supply chains.
The de minimis rule provides that a product that does not meet the product-specific rule of origin may still be considered originating if the value of non-originating materials does not exceed 10% of the product's transaction value (or 10% of net cost for automotive products). For textiles, the de minimis percentage is measured by weight. This rule provides flexibility for products where a minor non-regional component prevents strict compliance with the rule.
Some products have different de minimis rules or do not have access to this flexibility. For example, certain dairy, agricultural, and textile products have specific requirements that must be consulted in the relevant treaty annex. Always verify the rule applicable to your specific product.
One of the USMCA's innovations is its dedicated digital trade chapter, which did not exist in NAFTA. This chapter establishes rules for cross-border electronic commerce that benefit both businesses and consumers in the region.
These provisions are particularly relevant for technology and digital services companies operating in the region. They also affect importers who use digital platforms to manage their foreign trade operations, as their data can flow freely between offices in all three countries.
Maximizing USMCA benefits requires a comprehensive strategy involving the company's foreign trade, procurement, production, and engineering departments. Certifying origin alone is not enough: the supply chain must be designed to maximize regional content.
The USMCA includes a review clause every 6 years. The first review is scheduled for July 2026, where the three countries will evaluate the agreement's functioning and may propose adjustments. It is important for companies to monitor potential changes to rules of origin that could affect their operations.
Camtom Team
Editorial Team
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