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Trade between Canada, the United States of America, and Mexico has helped each country foster valuable working relationships. However, if you haven’t imported from one of these two countries since 2019, you’ll need to know about the new free trade agreement (FTA) governing each one.
Key Takeaways:
If you’re an importer that’s bringing in goods from Canada or Mexico, our team can help you understand USMCA trade guidelines.
The North American Free Trade Agreement (NAFTA) was an FTA that eliminated tariffs on most products traded between Mexico, Canada, and the United States. The FTA went into effect on January 1, 1994, and it gradually phased out tariffs for numerous products until January 1, 2008.
Tariffs were eliminated for many items, such as:
NAFTA succeeded in creating a huge free-trade zone between these three countries. The FTA also established many other beneficial provisions.
On June 30th, 2020, NAFTA came to an end and would be replaced by a new FTA.
Related: Import Costs from Mexico
On November 30, 2018, the United States-Mexico-Canada Agreement (USMCA) was signed and took full effect on July 1, 2020. This FTA replaced and improved many of the provisions set by NAFTA.
USMCA consists of 34 chapters and numerous side letters. Many of NAFTA’s original chapters remain in this new FTA. That said, the member countries made changes to the provisions of its predecessor.
This includes increased intellectual property protections and the establishment of an independent investigatory panel that looks into worker rights violations. USMCA also contains other provisions for products that weren’t as significant under NAFTA.
USMCA has a 16-year lifespan, which means it will end in 2036. However, each member country plans to review the FTA in July 2026 to determine if they want to renew it.
Related: Importing from Canada to U.S.
Now that you have a basic understanding on how these FTAs work, it’s important to know where they differ from one another. I’ve provided a graphic that shows the variations between NAFTA and USMCA.
As the comparison shows, USMCA enhanced many of the provisions created by NAFTA. This has made importing much easier for businesses working under this FTA.
The preferential tariff treatment provided by USMCA have been circumvented by tariffs imposed by the Trump administration. On February 1st, 2025, he issued executive orders imposing a 25% ad valorem rate of duty on imports from Mexico and Canada.
Each executive order says the 25% tariff will be applicable to all articles. This suggests any products imported for consumption will be subject to the new rate. For Canada, a 10% rate will apply to energy and energy resource imports. That said, the rate will likely rise in the near-future.
Enforcement of the tariffs were supposed to commence on February 4th, 2025 a.m. EST. They’ve now been postponed for one month. Mexico and Canada were able to come to an agreement with the United States. Each country has agreed to reinforce their borders in an attempt to stop drug trafficking.
On March 4th, 2025, the one-month postponement ended and the 25% tariff on imports from Canada and Mexico commenced as planned. The 10% tariff on Canadian energy products have taken effect as well. There is no indication as to how long these tariffs will stay in place.
President Trump made the decision on March 5th 2025 to exempt automobile imports from Mexico and Canada from the 25% tariff. This decision was made at the behest of General Motors, Ford, and Stellantis. Unfortunately, this exemption will only last for one month.
On March 6th, president Trump chose to postpone the 25% tariff on certain imports from Mexico and Canada that qualify for duty-free entry under the USMCA. That said, 50% of Mexican imports and 60% of Canadian imports will still be subject to the tariff.
Canada has responded with their own 25% tariff that will be applied to $20 billion worth of U.S. products. Another $86.5 billion of U.S. goods will also be subject to the same tariffs by March 25th.
The requirements and stipulations in USMCA can be difficult to grasp if you haven’t imported since 2019. At USA Customs Clearance, we’ll tell you if your goods are eligible for preferential tariff treatment. You can also use different services to help you with your import needs.
These services are essential if you want to understand USMCA or if you’re a new importer. If you require further guidance, contact our team through the site. USA Customs Clearance Team Members are also available at (855) 912-0406.
Our personalized approach and commitment to customer service will help you understand your unique customs needs.
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