For the vast majority of goods, covering over 98% of tariff lines and over 99.9% of bilateral trade between Canada and the United States, Canadian exporters may qualify for preferential tariff treatment under the Canada–United States–Mexico Agreement (CUSMA). To qualify, goods must meet the applicable CUSMA rules of origin, and preferential treatment must be properly claimed using a valid certification of origin. CUSMA compliance can exempt goods from certain U.S. tariffs (e.g., Section 301 tariffs), but it does not provide an exemption from all U.S. tariffs (e.g., Section 338 tariffs). Canadian exports of CUSMA compliant goods to the U.S. were previously exempt from U.S. tariffs imposed under the International Emergency Economic Powers Act (IEEPA) and Section 122 of the Trade Act of 1974, and remain exempt from U.S. tariffs imposed under Section 301 of the Trade Act of 1974. However, CUSMA compliant goods are not fully exempt from U.S. sectoral tariffs imposed under Section 232 on steel, aluminum, copper, autos, trucks, buses, certain wood products, certain semiconductors, and certain patented pharmaceuticals and associated pharmaceutical ingredients. CUSMA compliant goods are not exempt from U.S. Section 338 tariffs that currently apply to a range of imports from Canada.
To qualify as “CUSMA compliant” when imported into the U.S., a good must meet the CUSMA rules of origin, which determine how much production must be undertaken in North America for goods to be considered originating under the Agreement. Goods that are “wholly obtained” (e.g., wheat grown in Canada or salmon fished in Canada) are also considered originating under the Agreement.
If a good meets the rules of origin, it is not automatically granted duty-free tariff treatment. This benefit must be claimed by the importer on the basis of a certification of origin. Goods that do not satisfy the rules of origin or do not have the certification of origin are considered non-originating and are not eligible for preferential tariff treatment under the Agreement.
Prior to U.S. tariff actions beginning in March of 2025, some Canadian companies had not sought preferential treatment under CUSMA when exporting to the U.S. because their exports were subject to low tariffs or no tariffs. There is now a stronger incentive for companies to achieve CUSMA compliance for their exports to the U.S., as most exports were previously subject to IEEPA and Section 122 tariffs, and are now subject to 10% Section 301 tariffs, unless they meet the CUSMA rules of origin and make a claim for preferential tariff treatment.
Note: The CUSMA rules of origin are used to determine CUSMA compliance. The rules that the United States uses to determine country of origin for other trade measures, such as Section 232 or 338 tariffs, may differ depending on the measure in question.
