Effective today, the U.S. Mexico Canada Agreement (USMCA) is a free trade agreement between these countries that has been negotiated for the last couple of years which is to replace the existing North American Free Trade Agreement or NAFTA. Instead of creating USMCA from scratch, the countries have enhanced the previous NAFTA agreement to create a better version for all parties and signed the final ratification on March 13, 2020.
Key Negotiation Areas
The USMCA addresses several high-impact sectors that were central to renegotiation efforts:
Digital Trade & E-Commerce: USMCA introduces modern provisions to support digital trade, such as protections for source code and cross-border data flows, which were not addressed in NAFTA.
Automotive Industry: Vehicles must now have 75% North American content (up from 62.5% under NAFTA) to qualify for tariff-free trade. A portion of production must also occur in facilities paying workers at least $16/hour.
Agricultural Access: The agreement expands U.S. access to Canada’s dairy, egg, and poultry markets, opening new opportunities for American farmers.
Steel and Aluminum: New guidelines emphasize regional sourcing, especially for automotive manufacturing, and help regulate the imposition of tariffs.
Documentation & Compliance Changes
One of the key procedural changes in USMCA is the move away from an official certificate of origin form. Instead, shippers must now provide nine required data elements that can appear on a commercial invoice, in an email, or on a custom form.
Some of our clients are incorporating this data directly into their invoices, while others are using a separate format or digital communication. There’s flexibility—but compliance with the required elements is essential.
The negotiations focused largely on auto exports, steel and aluminum tariffs, along with dairy, egg and poultry markets. The new agreement will support mutually beneficial trade leading to freer markets, fairer trade, and robust economic growth in North America.
How to Prepare
To ensure your business is compliant and ready to take full advantage of USMCA, we recommend the following steps:
- Review Product Eligibility
Double-check whether your goods meet the new rules of origin to maintain tariff-free status. - Update Internal Processes
Adjust your documentation procedures, ERP systems, and invoice templates to include the USMCA-required information. - Train Your Team
Make sure your operations, sales, and compliance teams understand how the USMCA differs from NAFTA. - Communicate With Your Trade Partners
Align with your suppliers and customers across borders to ensure all required documentation is in place.
USMCA: A Modern Trade Framework
USMCA represents more than just a trade update—it reflects a renewed commitment to cooperation, fair competition, and regional economic strength. While the transition from NAFTA may bring some initial adjustments, the long-term benefits of a unified and modernized agreement are expected to bring stability and opportunity for businesses across all three nations.
For any questions about the USMCA documentation, how it affects your business, or help determining product eligibility, contact Jade International. We’re here to assist and ensure your trade flows smoothly under the new agreement.
