The US has 14 free trade agreements with 20 countries that can eliminate or significantly reduce import duties on qualifying goods. USMCA alone covers $1.5 trillion in annual trade. Here's how to capture these benefits.
The United States has free trade agreements with 20 countries:
• USMCA (Canada, Mexico) — replaced NAFTA in 2020
• KORUS (South Korea)
• US-Australia FTA
• US-Singapore FTA
• US-Chile FTA
• US-Colombia FTA
• US-Panama FTA
• US-Peru FTA
• CAFTA-DR (Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, Dominican Republic)
• US-Bahrain FTA
• US-Israel FTA
• US-Jordan FTA
• US-Morocco FTA
• US-Oman FTA
For freight brokers, USMCA is by far the most important — Mexico and Canada are the US's top two trading partners, and USMCA's rules of origin requirements have significantly affected supply chain decisions.
USMCA (United States-Mexico-Canada Agreement), which replaced NAFTA on July 1, 2020, made several significant changes affecting importers:
Automotive rules of origin: The biggest change. USMCA requires 75% (up from 62.5% under NAFTA) regional value content for vehicles and auto parts to qualify for duty-free treatment. Additionally, 40-45% of auto production must come from workers earning $16+/hour. This drove significant reshoring and North American supply chain restructuring.
Steel and aluminum: 70% of steel/aluminum content in vehicles must be sourced from North America.
Digital trade: New provisions protecting e-commerce and cross-border data flows.
Agriculture: Enhanced market access for US dairy exports to Canada; changes to Canadian supply management for dairy and poultry.
Dispute resolution: Changes to investor-state dispute settlement mechanisms.
Textile/apparel: Slightly looser rules in some categories, but with "short supply" provisions for inputs not available in North America.
To claim USMCA duty-free treatment, goods must "originate" in the US, Canada, or Mexico under three tests:
1. Wholly obtained: Goods grown, harvested, or extracted entirely in North America. Agricultural products typically qualify this way.
2. Tariff shift: The HTS classification of the finished product is different from the classification of the non-originating inputs used to make it. Each product category has a specific tariff shift rule.
3. Regional Value Content (RVC): A specified percentage of the product's value must be from North American content. Calculated using either:
• Transaction Value method: (TV minus VNM) / TV × 100%
• Net Cost method: (NC minus VNM) / NC × 100%
Certification requirements:
USMCA uses a "certification of origin" rather than a government-issued certificate. The importer, exporter, or producer can certify origin. The certification must include 9 data elements per Article 5.2 of USMCA. No standard form is required — importers often use CBP's model certification template.
KORUS (US-South Korea FTA):
One of the largest US FTAs by trade volume. Eliminated duties on 95% of products within 5 years of implementation (2012). Critical for electronics, auto parts, chemicals, and machinery. South Korea is a top-10 US import source.
US-Australia FTA:
Eliminated nearly all goods duties. Strong for agricultural products, chemicals, and manufactured goods. Australia is a significant US export market.
CAFTA-DR (Central America):
Covers Guatemala, El Salvador, Honduras, Nicaragua, Costa Rica, and Dominican Republic. Important for apparel, textiles, agricultural goods, and manufacturing. Many apparel importers leverage CAFTA as an alternative to Asian sourcing.
GSP (Generalized System of Preferences):
Note: GSP is not an FTA but a unilateral preference program. It provides duty-free treatment to ~120 developing countries for thousands of HTS codes. GSP has historically lapsed and been renewed by Congress — check current status before relying on it.
Step 1: Verify your HTS code qualifies
Not all HTS codes receive preferential treatment under every FTA. The "Special" column in the HTS shows program codes (CA = USMCA, KR = KORUS, AU = US-Australia, etc.) and the preferential rate (often "Free").
Step 2: Verify your goods qualify under the rules of origin
This is the complex step. You need documentation from your supplier: material content, manufacturing processes, value of non-originating inputs, etc.
Step 3: Obtain or prepare a certification of origin
For USMCA: the exporter or producer certifies origin using the required 9 data elements. Keep this on file — you may need it for a CBP audit.
Step 4: Claim the FTA rate on your import entry
On CBP Form 7501, enter the Special Program Indicator (SPI) code for the applicable FTA in the "Special Programs" field. Without this code, CBP will assess the standard MFN rate.
Step 5: Maintain records
Keep documentation supporting your origin claim for 5 years from the date of import. CBP can audit FTA claims at any time within this period.
Incorrectly claiming FTA benefits is a form of customs fraud. Risks include:
• Duty + interest recovery: CBP can recover the duties you should have paid plus interest
• Penalties: Up to 4x the unpaid duties for negligent claims; higher for fraud
• Loss of FTA privileges: Repeat violators can be barred from claiming preferential treatment
• Criminal liability: In cases of intentional fraud
Common FTA compliance failures:
• Relying on supplier origin certifications without verifying the underlying facts
• Not understanding that country of origin ≠ country of shipment
• Failing to account for non-originating materials in the value content calculation
• Not keeping records for the required 5-year retention period
Best practice: Have a qualified trade attorney or customs broker review your FTA claims, especially for high-volume import programs. The duty savings are significant, but so are the compliance risks.
Real US CBP manifest data for freight brokers and importers
Check two things: (1) In the HTS, look up your 10-digit code and find "CA" in the Special column — if it shows "Free," USMCA eliminates the duty. (2) Verify your goods meet the rules of origin — tariff shift, RVC threshold, or wholly obtained. Your supplier needs to certify that their product meets the origin requirements with documentation to back it up.
NAFTA used a government-issued Certificate of Origin on CBP Form 434. USMCA replaced this with a self-certification model — the importer, exporter, or producer creates their own certification document containing 9 mandatory data elements. No specific CBP form is required, though CBP provides a model template. The importer makes the claim on the entry summary (CBP Form 7501) using the "CA" SPI code.
Yes, for entries within the past year. CBP allows post-importation claims for FTA preferential treatment (19 CFR 10.1003). You file a claim within 1 year of the date of importation with CBP documentation. After that window closes, you must file a protest (within 180 days of liquidation) or you're out of luck — so catch missed FTA claims early.
No. USMCA only applies to goods that "originate" in Mexico (or Canada) under the agreement's rules of origin. A product assembled in Mexico from 100% Chinese components typically does NOT qualify for USMCA benefits unless it meets the tariff shift or RVC requirements. This is why CBP scrutinizes USMCA claims involving manufacturing in Mexico from Asian inputs.
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