importing from canada/mexico to the U.s.

understanding the process

When importing goods from Canada or Mexico to the United States, there are a few key points to understand so you can take advantage of the United States-Mexico-Canada Agreement (USMCA). Knowing the import process, how to qualify for tariff elimination, and other general requirements will allow you to get the best possible efficient transaction.

1. Tariff Elimination:

Following a few key points in the USMCA will help you import goods to the U.S. without tariffs. The USMCA maintains the tariff-free status for most goods traded between the U.S, Canada, and Mexico. However, specific rules and documentation requirements must be met to benefit from tariff elimination. To claim this preferential treatment, the importer must make a written declaration based on a valid Certificate of Origin and provide this certificate upon request by U.S. Customs and Border Protection.

— Certificate of Origin: To qualify for preferential tariff-free treatment, goods must meet specific rules of origin, meaning a certain percentage of the product must be made in the US, Canada, or Mexico. Each product category has different requirements. Furthermore, there are several other specific considerations when determining a valid certificate of origin possibly including meeting tariff classification changes, and avoiding production outside USMCA territories. A Certificate of Origin is required with the goods when crossing the border to eliminate tariffs. The exporter or the producer can complete this certificate. Verify that your exporter has a valid Certificate of Origin which aligns with the tariff elimination of USMCA.

— The buyer is responsible for making a written declaration that the goods qualify as originating goods under the relevant trade agreements, such as the USMCA. This declaration must be based on a valid Certificate of Origin, which the buyer must have in possession at the time of the declaration and provide upon request.

2. Items Not Applicable for Tariff-Free Treatment:

Some specific items do not qualify for duty-free status. Textiles, apparel articles, footwear, handbags, luggage, flat goods, work gloves, leather wearing apparel, and handloomed, handmade, or folklore articles that are not granted duty-free status in the Harmonized Tariff Schedule of the United States (HTSUS). Additionally, tuna prepared or preserved in any manner in airtight containers, and watches and watch parts (including cases, bracelets, and straps) containing any material that is the product of any country to which the HTSUS column 2 rates of duty apply, are also excluded. Also, any goods originating from Cuba or containing Cuban materials are not eligible for tariff-free treatment under the USMCA. Verify with the HTSUS that your goods do not fall under any of these categories.

3. Item-Specific Requirements:

For goods imported temporarily for repair, alteration, or processing and then exported to Canada or Mexico, duties are assessed based on the condition of the goods at the time of their importation into the United States. These duties must be paid within 60 days of exportation or entry into a duty-deferral program, with the possibility of a waiver or reduction under certain conditions. It is also important to note that specific goods, such as vehicles, have additional requirements. For example, importers of vehicles from Canada must furnish a bond equal to 150% of the vehicle’s dutiable value and file a declaration with CBP regarding the vehicle’s conformity with federal standards.

4. Customs Regulations:

Knowing customs regulations is important in order to follow proper procedures and ensure things progress smoothly. Customs and Border Protection (CBP) regulations include necessary documentation (such as Commercial invoice, Bill of lading, Packing list etc…) and understanding the entry process. The entry process is such that the goods must be properly inspected and declared upon entry. Ensure you have the proper documentation, declare your goods, and follow the procedures that are in place.

5. Low-Value Shipments:

To qualify as a low-value shipment, the goods must be less than $800 USD. These shipments can enter the U.S. duty-free.

6. Record Maintaining:

Importers must maintain comprehensive records related to the importation and exportation of goods. This includes documentation of the value of goods at the time of importation and exportation, evidence of exportation, and any customs duties paid to Canada or Mexico. Failure to maintain adequate records can result in the denial of claims for duty waivers or reductions.

7. Customs Brokers:

A customs broker assists individuals or businesses importing goods into the U.S. by handling the complex process of customs clearance. They ensure that all necessary documentation is accurately completed and submitted, calculate and pay applicable duties and taxes, and ensure compliance with U.S. Customs and Border Protection (CBP) regulations. Customs brokers also help navigate specific trade agreements, such as USMCA, and advise on tariff classifications and valuation. Their expertise minimizes the risk of delays or penalties, making the import process smoother and more efficient.

Penalties for mistakes or non-compliance

Non-compliance with U.S. import procedures or making mistakes during the import process can lead to various penalties, depending on the severity of the violation.

  1. Civil Fines:

Importers may be subject to civil fines for incorrect or incomplete documentation, misclassification of goods, undervaluation, or failure to declare goods properly. Fines can range from a few hundred to several thousand dollars per violation, depending on the severity and whether the violation was intentional or accidental.

2. Penalties for Fraud:

If fraud is involved, penalties can be severe, including fines up to the value of the goods or higher. Under 19 U.S.C. § 1592, penalties can be up to four times the loss of revenue or the value of the goods involved.

3. Interest on Unpaid Duties:

If duties are not paid on time due to errors, CBP may charge interest on the overdue amount.

4. Late Filing Fees:

Failing to file necessary documentation on time can result in additional fees.

5. Seizure of Goods:

CBP may seize goods if they are improperly declared, classified, or if they violate U.S. regulations (e.g., importing prohibited items). Seized goods may be forfeited to the U.S. government.

6. Forfeiture:

In severe cases, especially involving illegal or fraudulent activities, goods can be permanently forfeited, meaning the importer loses ownership of the goods without compensation.

7. Criminal Charges:

In cases of intentional fraud, smuggling, or violations of laws such as the Lacey Act (illegal trafficking of wildlife, fish, and plants), individuals or companies may face criminal charges, leading to substantial fines and imprisonment.

Additional Resources

1. USMCA Full Text: This is a primary source for understanding the specific provisions of the agreement, including rules of origin, tariff schedules, and dispute resolution mechanisms.

- Available on the United States Trade Representative (USTR) website.

2. CBP Importing into the United States: This comprehensive guide covers the entire import process, including documentation requirements, customs duties, and compliance with US regulations.

- Available on the U.S. Customs and Border Protection (CBP) Website.

3. Public Law 116-113: The USMCA Implementation Act (H.R. 5430) provides the statutory framework for how the USMCA is implemented within the United States. This law outlines the specific legal changes and adaptations needed to align US law with the provisions of the USMCA.

- Available through the Congress.gov website.

4. HTSUS: This is the primary resource for determining the classification and applicable duty rates for imported goods. It’s essential for understanding how to properly classify goods to benefit from tariff elimination under the USMCA.

- Available on the United States International Trade Commission (USITC) website.

5. Title 19 - Customs Duties: This section of the CFR contains the federal regulations governing the importation of goods into the United States, including rules that apply to customs brokers, entry procedures, and duty assessments.

- Available on the Electronic Code of Federal Regulations (eCFR) website.

6. Title 15 - Commerce and Foreign Trade: This title covers regulations on export administration, international trade administration, and other commerce-related topics relevant to importers.

- Available on the Electronic Code of Federal Regulations (eCFR) website.

7. Tariff Act of 1930: The foundational law for customs duties, this act (also known as the Smoot-Hawley Tariff Act) has been amended multiple times and remains critical in understanding customs procedures and enforcement.

- Available through the GovInfo.gov website.

8. Customs Modernization Act (Mod Act): Part of the North American Free Trade Agreement Implementation Act, the Mod Act introduced the concept of “informed compliance” and “shared responsibility,” which are key principles for importers under US law.

- Available on the U.S. Customs and Border Protection (CBP) website.

9. USDA Foreign Agricultural Service: For agricultural imports, the USDA provides specific guidance on importing food products, including compliance with sanitary and phytosanitary measures under the USMCA.

- Available on the USDA Foreign Agricultural Service (FAS) website.

10. “Importing into the United States” Handbook by the U.S. Department of Commerce: A practical guide that outlines the steps and requirements for importing goods, including specific details on trade agreements like the USMCA.

- Available on the U.S. Department of Commerce website.

11. “USMCA: What Every Importer and Exporter Needs to Know” by John T. Oliver: A book providing a detailed explanation of the USMCA’s provisions and how they impact import and export operations.

- Available on various book retail websites like Amazon.