As businesses review their supply chains, they may notice some of their suppliers can no longer qualify their goods as duty-free under the new agreement.
However, while trade treaties are a key factor to consider when reviewing the procurement decision tree, they are just one of several. Considering the total cost of potential items, quality, and logistics, the non-CUSMA items may still present the best option. Businesses will need to decide whether to prioritize sourcing from the U.S. and Mexico over offshore suppliers that will cost them duties.
And some businesses may take the opposite approach. With their legacy input no longer exempt from duties, they may explore procurement routes in other countries worldwide. As a result, the new sourcing model may not qualify as duty-free.
Then again, Canada has diversified its trade agreements in recent years. As a result, importers and exporters should remember the duty-free opportunities offered by newer treaties. Chief among them: the Comprehensive Economic and Trade Agreement, or CETA, which covers the European Union; the Canada-UK Trade Continuity Agreement, crafted on the heels of Brexit; and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, the CPTPP, primarily with important trading partners in Asia.