USMCA

Definition

USMCA is the free-trade agreement among the United States, Mexico, and Canada that replaced NAFTA in July 2020. Under USMCA, goods that qualify under the agreement's rules of origin enter the US duty-free, preempting the MFN rate. USMCA's rules of origin are stricter than NAFTA's — particularly for autos, where the agreement requires 75% North American content and 40–45% labor-value content from workers earning at least $16/hour. To claim USMCA preferential treatment, an importer files a USMCA Certification of Origin with the entry. USMCA-qualifying goods are also exempt from the Section 122 10% global baseline, making the origin claim particularly valuable in 2026.