The Canada-United States-Mexico Agreement (CUSMA) is a free trade agreement that brings together Canada, the United States, and Mexico into one regional trade bloc. CUSMA relieves tariffs on qualifying goods, helping to lower trade barriers and reduce costs for North American importers and exporters. Businesses must ensure their goods comply with the agreement’s specific requirements to access these benefits.
The role of CUSMA in the modern trade environment
CUSMA supports North American trade by allowing most goods to move tariff-free between Canada, the U.S., and Mexico, benefiting sectors like automotive, agriculture, and technology amongst many others. Over 98% of tariff classifications and 99.9% of trade between Canada and the U.S. qualify for preferential treatment where conditions are met. The agreement protects against new tariffs, such as those under the U.S. International Emergency Economic Powers Act (IEEPA) and is intended to help minimize the impact of trade tensions within North America.
CUSMA also promotes inclusive trade by recognizing Indigenous rights, supporting gender equality, and ensuring fair treatment for state-owned enterprises. It modernizes rules for digital trade, intellectual property, and customs, while raising regional content requirements, particularly in the automotive sector.
Understanding CUSMA compliance
As of March 7, 2025, tariffs imposed under the U.S. International Emergency Economic Powers Act (IEEPA) have been paused for goods imported from Canada that qualify for duty-free preferential treatment under CUSMA. For goods imported into the U.S., importers can claim preferential treatment under CUSMA if they meet all of the agreement’s conditions including the Rules of Origin. The Rules of Origin condition can be complex for businesses and defines the level of production that must occur within North America for goods to be considered originating under the Agreement.
Understanding the rules of origin under CUSMA
The CUSMA Rules of Origin include both general and product-specific rules (PSROs). Certain goods—such as vegetables harvested, or minerals mined in Canada—qualify under an “wholly obtained or produced” Rule of Origin. Other goods made from imported or mixed materials may be considered "originating" if they meet the applicable PSROs.
These criteria can include:
- Tariff Classification Change – The final product must fall under a different tariff classification than its inputs.
- Value Requirement – A specified percentage of the product’s value must be added within North America.
- Process Requirement – The good must undergo a specific production process as defined by the Agreement.
Goods not covered by CUSMA
In both Canada and the U.S. certain goods are not fully eligible for preferential treatment under CUSMA, even if they meet the Agreement’s rules of origin. To manage these exceptions, both countries have established tariff-rate quotas (TRQs). A TRQ sets a limit on the quantity of a product that can be imported at a lower, preferential tariff rate.
Under CUSMA, the U.S. maintains TRQs on specific products such as dairy, sugar, and sugar-containing goods. Only imports within these TRQ access levels are eligible for exemption from IEEPA tariffs when entering duty-free under CUSMA.
Evaluating the costs and benefits of CUSMA compliance
Pursuing CUSMA compliance comes down to a cost-benefit analysis. For businesses with complex products or supply chains, the process can be resource intensive. However, the potential savings from tariff exemptions may be significant and even critical to those businesses that have traditionally relied on CUSMA for tariff relief amid ongoing trade tensions.
How can BDO help?
BDO’s CUSMA/USMCA Qualification Services helps businesses ensure their goods meet the trade agreement requirements by offering:
- Identification of goods that qualify for CUSMA benefits and those subject to duties
- Comprehensive CUSMA Origin Analysis to confirm product eligibility
- Verification that CUSMA certifications are accurately completed
- Support with the preparation and acquisition of proper CUSMA certifications
- Guidance to ensure your supply chain is compliant with Section 211 requirements
- Audit readiness in case of reviews by the CBSA or U.S. CBP
For businesses reliant on North American trade, CUSMA compliance is now essential to maintaining market access, safeguarding profit margins, and staying competitive.
Our team of trade consultants in Canada and around the world can help you navigate compliance and efficiency. To learn how, reach out to: