The United States-Mexico-Canada Agreement (USMCA) is the trilateral trade agreement that replaced NAFTA on July 1, 2020. It governs approximately $2 trillion in annual trade between the three North American countries and provides preferential — often zero — duty rates for goods that meet its rules of origin requirements. The agreement includes updated provisions for digital trade, intellectual property, labor standards, and environmental protections that were absent from NAFTA.
Why It Matters for Importers
For importers sourcing from Mexico or Canada, USMCA can eliminate or significantly reduce duty costs. However, the agreement's rules of origin are more stringent than NAFTA's were. Products must meet specific criteria — including tariff shift requirements, regional value content thresholds, and in some cases labor value content requirements — to qualify for preferential treatment. Simply being manufactured in Mexico or Canada does not automatically mean a product qualifies.
The stakes for getting USMCA claims right are high. CBP verifies origin claims and can retroactively deny preferential treatment, assess full MFN duties on past entries, and impose penalties. With the first mandatory review of the agreement beginning in July 2026, importers should be auditing their USMCA compliance now to ensure their claims are defensible.
Key Details
- USMCA entered into force on July 1, 2020, replacing the 26-year-old NAFTA.
- The agreement has a 16-year term with a mandatory joint review at the 6-year mark (July 2026), at which point any party can choose to withdraw.
- Automotive rules of origin are the most complex in any trade agreement, requiring 75% regional value content (up from 62.5% under NAFTA) and a minimum labor value content of $16/hour for 40-45% of vehicle content.
- USMCA eliminated NAFTA's investor-state dispute settlement between the U.S. and Canada, and limited it between the U.S. and Mexico.
- The agreement requires a certificate of origin (which can be self-certified by the producer, exporter, or importer) to claim preferential treatment.
The 2026 Review
The first mandatory review of USMCA begins in July 2026. All three countries must confirm they wish to extend the agreement. While termination is unlikely, the review is expected to produce amendments and updated requirements. Importers relying on USMCA preferences should monitor developments closely, as changes to rules of origin could affect eligibility for their products.
For a detailed comparison of USMCA and NAFTA requirements, see our guide on USMCA vs. NAFTA.