Understanding CUSMA compliance

As of March 7, 2025, United States (U.S.) International Emergency Economic Powers Act (IEEPA) (i.e., border and fentanyl) tariffs have been paused for goods imported from Canada that qualify for duty-free preferential treatment under the Canada-United States-Mexico Agreement (CUSMA).

For the vast majority of goods (over 98% of tariff lines and over 99.9% of bilateral trade between Canada and the U.S.), traders can claim preference under the CUSMA if they meet the Agreement’s rules of origin.

To qualify for preferential treatment when imported into the U.S., a good must meet the CUSMA rules of origin, which determine how much production must be undertaken in North America for goods to be considered originating under the Agreement.

If a good meets the rules of origin, it is not automatically granted duty-free tariff treatment. This benefit must be claimed by the importer on the basis of a certification of origin. Goods that do not satisfy the rules of origin are considered non-originating and are not eligible for preferential tariff treatment under the Agreement.

Some Canadian exporters have not sought preferential treatment under the CUSMA, because they previously traded with the U.S. under the broader tariff regime applicable to all World Trade Organization members (Most-Favoured Nation trade status), often with very low or zero tariff rates. These goods are now subject to the U.S. IEEPA (border and fentanyl) tariffs unless they meet the CUSMA rules of origin and make a claim for preferential tariff treatment.

To be eligible for duty free treatment into the U.S., an importer must claim the CUSMA preference based on a certification of origin completed by the exporter, producer or importer. Details on what information should be included in a certification of origin can be found under the Certification of Origin Under Free Trade Agreements Memorandum D11-4-14.

Goods not accompanied by a certification of origin are considered non-originating and do not qualify for preferential tariff treatment under the CUSMA, and would be subject to the 25% or 10% IEEPA tariff, depending on the good.

There are also record keeping requirements associated with claiming preferential tariff treatment. These requirements are found in the CUSMA Chapter 5 – Origin procedures.

Exporters are encouraged to consult a customs broker for further advice on how to claim CUSMA preference.

The CUSMA rules of origin include both general rules of origin and product-specific rules of origin (PSROs).

Certain goods (e.g., vegetables harvested in Canada or minerals mined in Canada) are subject to a wholly obtained rule of origin.

Other goods that have been manufactured using imported materials or a combination of imported and North American materials will be considered “originating” if they meet the PSROs.

The CUSMA PSROs generally include 3 types of criteria:

• A change in tariff classification where the final good must be classified differently than the inputs used to make the good. For example, under the CUSMA rules of origin, a producer could import oak (classified in Harmonized System (HS) subheading 4407.91) from outside of North America to make a wood kitchen table (classified in HS subheading 9403.40).
• A value requirement where a certain percentage of value must be added in North America.
• A process requirement where the good must undergo a specified process, e.g., a shirt must be “cut and sewn” in North America.

All goods are subject to a product-specific rule of origin (PSRO), based on where they are classified in the Harmonized Commodity Description and Coding System (HS).

The HS classifies all products using codes that are organized by chapter (2 digits), heading (4 digits) and subheading (6 digits). HS codes are harmonized internationally up to the 6-digit level.

Much like a telephone book, traders can look up a rule for their specific product by looking up its HS classification and finding the corresponding PSRO under the CUSMA.

For goods imported into the U.S., the final decision on the classification and tariff treatment of a good rests with the U.S. Customs and Border Protection (CBP).

If there is any uncertainty regarding the importation of a good into the U.S., Canadian traders should direct their questions to the CBP. Traders may also request advance rulings from the CBP, which provide binding information on tariff classification and the treatment of a good.

Customs brokers are a good resource to help in determining whether your good meets the rules of origin.

Since March 7, 2025, any good that does not enter the U.S. under the CUSMA preferential duty-free treatment is subject to the 25% or 10% IEEPA (border and fentanyl) tariff applied by the U.S. on all imports from Canada.

A few agricultural goods (e.g. certain dairy products, sugar and sugar-containing products) are subject to the IEEPA (fentanyl) tariffs if they do not qualify for preferential treatment under the  within access portion of the U.S. tariff-rate quotas (TRQs) for Canada under the CUSMA.

Similarly, certain textiles and apparel goods that have been woven or cut and sewn in North America but do not meet the rules of origin, are subject to these tariffs unless they are eligible for preferential treatment under tariff preference levels (TPLs).

Canadian exports that previously entered the U.S. on a Most-Favoured-Nation (MFN) tariff-free basis now need to comply with the CUSMA rules of origin to avoid the U.S. IEEPA (border and fentanyl) tariffs that entered into force on March 4, 2025.

The actual scope of U.S. imports from Canada that can qualify for preferential treatment under the CUSMA is unclear given that many have been subject to 0% MFN tariffs in the U.S. and therefore previously did not have to claim the CUSMA preferences to benefit from duty-free treatment.

Information on the tariff treatment, including the CUSMA treatment, accorded to U.S. imports from Canada is publicly available at the following U.S. government website: DataWeb: U.S. Trade & Tariff Data and via the main U.S. Harmonized Tariff Schedule page. (In English only).

For both Canada and the U.S., there are certain goods that are not fully eligible for preferential treatment under the CUSMA, even if they meet the Agreement’s rules of origin.

In those select instances, both Canada and the U.S. provided tariff-rate quotas (TRQ). A TRQ is a quota that establishes a limit on the quantity of a product that may be imported at a lower (within access) preferential tariff rate. Under the CUSMA,the U.S. maintains TRQs on certain dairy products, sugar and sugar-containing products; only the within access imports of these TRQS are eligible for the exemption from IEEPA tariffs for goods imported duty-free under the CUSMA.

The CUSMA rules of origin are intended to reflect North American supply chains and production processes to the extent possible. However, certain goods, including those that use high amounts of materials imported from outside of North America, may not qualify under the Agreement.

To ensure the ability to meet the CUSMA rules of origin, producers may need to explore alternative sourcing options that increase the North American content in their goods.

The Government of Canada will also continue to support Canadian businesses to diversify and expand their export markets, including through the Trade Commissioner Service (TCS) and the comprehensive free trade agreements that Canada has in place.

Customs brokers and consulting or accounting firms can provide useful guidance to traders.

For general information regarding the CUSMA rules of origin and help finding the tariff classification of a good, traders may wish to consult the following:

• Find the tariff applicable for your product | Canada Tariff Finder
• Canada-United States-Mexico Agreement (CUSMA) - Chapter 4 - Rules of Origin
• World Customs Organization - Rules of Origin Facilitator

Information about importing goods into Canada:

• Importing goods into Canada – Importer des marchandises au Canada
• Low value shipment threshold
• Memorandum D11-11-3: Advance Rulings for Tariff Classification

Information about importing goods into the U.S.:

• Step-by-Step Guide to Exporting - Introduction
• Advance Rulings | U.S. Customs and Border Protection (English only)
• CBP's USMCA Centre (English only)
• Basic Importing and Exporting | U.S. Customs and Border Protection (English only)

To get help navigating tariffs, please use the contact a Trade Commissioner form.