USMCA Rules of Origin: Key Points and Common Pitfalls

by Kevin King, MBA

Founder, Clear Customs and Trade Solutions, LLC

Understanding the rules of origin under the United States-Mexico-Canada Agreement (USMCA) is essential if you're importing goods from Canada or Mexico. This has become even more critical now, as effective use of USMCA preference claims provides an exemption from the 25% IEEPA tariffs through April 2. These rules determine whether a product truly qualifies as originating, and while using them correctly can be very beneficial, even a small error in applying them can lead to denied claims, penalties, and retroactive duties.

There are four basic ways a product can qualify under USMCA’s rules of origin. First, the goods can be wholly obtained or produced in the U.S., Mexico, or Canada. This typically applies to natural goods like crops, minerals, or live animals raised in one of the three countries.

Second, goods that are produced entirely in the region using only originating materials also qualify. This means all inputs used must also meet the origin requirements under USMCA, which often requires a bill of materials analysis to identify and qualify each input.

The third and most common method involves products made with non-originating materials that undergo a qualifying tariff shift, which requires that they be transformed enough to fall under a different tariff classification. If they don’t, the goods may not qualify.

Lastly, regional value content (RVC) rules require that a certain percentage of the value of the goods come from originating materials or regional production. Calculations must follow specific formulas, and minor errors in cost or value determination may jeopardize claims.

Importers seeking to claim the USMCA exemption from IEEPA tariffs must ensure the product meets one of these origin criteria, and that they have strong documentation to support it. Keep in mind: the country of export is not the same as the country of origin. Just because a product ships from Mexico or Canada does not automatically make it eligible.

Before making a claim, consult the USMCA rules of origin, which can be found in General Note 11 to the U.S. Harmonized Tariff Schedule. Review supplier origin certifications carefully, double-check calculations, and consult with a trade professional if you’re still not sure. While valid USMCA preference claims can be an effective way to mitigate tariff exposure, claiming incorrectly can come with a heavy cost.

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