Recent developments in trade policy have prompted many businesses to reassess their approach to compliance under the United States-Mexico-Canada Agreement (USMCA). With a temporary halt to tariffs, companies are exploring ways to maximize savings and streamline operations. This article delves into the complexities of achieving USMCA compliance and outlines actionable strategies for businesses aiming to optimize their supply chains.

Unlock Your Business's Potential with USMCA Compliance

Reevaluating Trade Strategies Amid Policy Shifts

The landscape of international trade has seen significant shifts following recent administrative decisions. The temporary suspension of a 25% tariff on goods covered by the USMCA has sparked renewed interest among businesses seeking to align with this agreement. William Jansen, an expert in customs brokerage at Seko Logistics, highlighted that previously prohibitive costs associated with pursuing USMCA treatment now present substantial savings opportunities.This reprieve affects approximately half of imports from Mexico and nearly 40% from Canada, as reported by CNBC. Certain categories, such as produce, rubber, and plastics, enjoy complete duty exemptions during this period. In contrast, items like dairy products and specific fabrics benefit from reduced rates, while others, including leather goods and wood products, remain excluded. As the deadline approaches, enterprises are meticulously examining their product portfolios to determine eligibility for USMCA compliance, thereby mitigating tariff burdens.

Navigating the Pathway to USMCA Conformity

Achieving USMCA compliance involves internal assessments rather than external applications. According to Alexander Schaefer, a partner specializing in international trade at Crowell & Moring, the process can range from straightforward certifications to intricate analyses depending on the complexity of a company’s supply chain. For simpler cases, obtaining a country of origin certification from suppliers suffices. However, products involving multiple inputs necessitate detailed documentation reflecting changes in tariff headings.Consider a scenario where a firm imports titanium into Mexico, transforming it into components utilized in automotive parts manufacturing. Such transformations enable shifts in tariff classifications, facilitating USMCA alignment. Kelsey Christensen, an international trade attorney at Clark Hill, explained that these shifts are integral to fulfilling regional value content requirements, which mandate a specific proportion of finished goods to originate from USMCA territories.Regional value content stipulations vary based on product types. For instance, car parts must comprise 75% of materials sourced within the USMCA region. Moreover, approximately half of the labor cost should involve workers earning at least $16 per hour. Kevin Doucette, director of trade policy and security at C.H. Robinson, emphasized that product composition and intended usage significantly influence the complexity of compliance procedures.

Compliance Mechanisms and CBP Oversight

Companies possess flexibility in executing compliance measures. Angela Gamalski, a partner in Honigman’s regulatory department, outlined two primary methods: per-shipment analysis or annual blanket certifications. U.S. Customs and Border Protection (CBP) evaluates compliance via audits rather than scrutinizing individual shipments. Nevertheless, firms can opt for advanced customs approval if desired.To ensure adherence, companies might need to furnish CBP with country of origin certifications alongside supplementary documentation addressing tariff shifts and other facets of internal compliance evaluations. Mike Short, president of global forwarding at C.H. Robinson, noted an increasing trend among customers seeking guidance related to USMCA compliance, which has accelerated following recent amendments.

Strategic Implications for Businesses

The evolving trade environment presents both challenges and opportunities for businesses operating across USMCA borders. Enterprises must balance immediate cost-saving initiatives with long-term strategic planning. Jonathan Todd, vice chair of the transportation and logistics practice group at Benesch Friedlander Coplan & Aronoff, urged companies to conduct thorough USMCA analyses promptly to ascertain potential benefits.As the deadline nears, proactive organizations are leveraging this pause to refine their supply chain strategies, ensuring optimal utilization of available resources. By embracing comprehensive compliance frameworks, businesses not only mitigate current tariff impacts but also position themselves favorably in anticipation of future policy changes. Understanding and implementing these strategies will undoubtedly enhance competitiveness within the global market.