Businesses importing products from Mexico into the United States generally do not need to pay tariffs, due to the provisions set by the United States‑Mexico‑Canada Agreement (USMCA).
This guide explains tariffs and customs duties from the perspective of US companies importing products from suppliers in Mexico. We also explain what the USMCA is, and how to determine duty rates for your product.
Methodology
This article is based on our research that mainly involved the following sources:
a. Agreement between the United States of America, the United Mexican States, and Canada 7/1/20 Text
b. UNITED STATES–MEXICO–CANADA TRADE FACT SHEET Rebalancing Trade to Support Manufacturing
c. U.S. – Mexico – Canada Agreement (USMCA) Frequently Asked Questions
d. U.S. Customs and Border Protection Export Duties FACT SHEET
e. FTA Certificates of Origin
f. FTA Tariff Tool
g. How Tariff Calculations Work
h. Duty – Cost Insurance and Freight (CIF)
i. Harmonized Tariff Schedule
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United States‑Mexico‑Canada Agreement (USMCA)
The United States–Mexico–Canada Agreement (USMCA) substituted the North America Free Trade Agreement (NAFTA) and took effect on July 1, 2020. The goal of the agreement is to support North American manufacturing and trade.
The USMCA is a trade agreement between the United States, Mexico, and Canada, which mutually benefits the three countries involved in areas such as:
- Trade
- Food and agricultural
- Intellectual property
- Environment
It also establishes a free trade area between the three countries.
Do tariffs or customs duties apply to imports from Mexico to the US?
The USMCA sets a zero rate of customs duty or tax on products imported from Mexico to the United States:
ANNEX 2-B
TARIFF COMMITMENTS
1. The rate of customs duty for an originating good under this Agreement is indicated in each Party’s Schedule to this Annex.
2. Except as otherwise provided in a Party’s Schedule to this Annex, and in accordance with Article 2.4 (Treatment of Customs Duties), the rate of customs duty on originating goods is designated with “0,” and these goods shall be duty-free on the date of entry into force of this Agreement.
3. For originating goods provided for in the items marked with an asterisk (*) in a Party’s Schedule to this Annex, the tariff treatment set forth in Appendix 1 to that Party’s Schedule applies.
The US Tariff Schedule, which is also found in the USMCA lists the duty rate from products originating from Mexico and Canada. Here is an example of a product for which there is no customs duty:
- Product: Pacifiers
- HTSUS: 39269016
- Duty rate: 0
Note that ANNEX 2-B claims that there exists a customs duty higher than zero for products marked with an asterisk (*) in the US Tariff Schedule to Annex 2-B. However, we could only find asterisks (*) from goods originating from Canada, not for goods originating from Mexico.
Specific tariffs can be found in the US Tariff Schedule Appendix 1.
Can US companies import tariff or duty-free from Mexico?
The Office of the United States Trade Representative published a fact sheet regarding the USMCA that notes manufactured originating goods traded between the US and Mexico are subject to duty-free treatment.
This implies US companies can import duty-free products from Mexico into the US. This is also specified in the USMCA text, as explained in the previous section.
How do I know which rate applies to a product?
There are different ways to find out which rate applies to your product.
Method 1
Assuming that you are importing from Mexico or Canada:
1. Go to the USMCA contents page.
2. Click on “US Tariff Schedule”, which lists zero-rated products. For instance, pacifiers are duty-free.
Method 2
In this example, we are assuming that you are importing from Mexico:
1. Go to the FTA Tariff Tool
2. Select “You are importing goods from an FTA Partner into the United States.”
3. Select “Mexico USMCA” as an FTA partner.
4. Enter an HS Code (e.g., 39269048 for photo albums). Even though this field is not mandatory, the tool provides a link to the “Schedule B Search Engine”, which allows you to find HS codes using keywords.
4. Click on “SEARCH”
5. Click on the underlined HS Code. You will see the duty rates for the product.
Method 3
You can use the Harmonized Tariff Schedule (hts.usitc.gov) to search for the customs duties for your product, even if the country of importation does not have an FTA with the United States.
You can either enter the HS code in the search box, if you know it, or browse among the different chapters and product categories.
How do I calculate the payable tariffs or customs duties?
In general, you calculate the payable tariffs for a given product by multiplying the original price of the product by the duty rate that applies to that product. For instance:
- Product: Pacifiers
- Product value (total): USD 100,000
- HS Code: 39269016
- Country of origin: Mexico
- Duty rate: 0
Calculation:
Customs duties: Product price x Duty Rate = USD 100,000 x 0 = USD 0.
If you were importing from a different country, the duty right could be higher than zero, in which case there would be customs duties. You can find duty rates for all countries on the Harmonized Tariff Schedule.
HS codes
What are HS codes?
HS stands for “Harmonized System”. HS codes are – according to the US government’s International Trade Administration (ITA) – a product classification system that is accepted worldwide.
The first 6 digits of HS codes are usually identical worldwide, and can be broken down into three parts:
- First two digits – the chapter in which the goods are classified
- Second two digits – headings within said chapter
- Last two digits – specific subheading
Some countries use more numbers in the HS code. The United States uses up to 10-digit HS codes. Note that some HS code may have less than 10 digits. For instance, the HS code for photo albums is 39269048.
How do I know which HS code applies to my product?
You can use the Harmonized Tariff Schedule and browse through the categories to find out the HS code for your product. Alternatively, you can enter a keyword in the search box.
For example, the keyword “pacifiers” will return the HS code 39269016.
Rules of origin
Chapter 4 of the USMCA details the rules of origin, and provides “Product-Specific Rules of Origin” in Annex 4-B. For instance, agricultural goods, such as vegetable products, grown in Mexico should be treated as originating in Mexico even if grown from a plant part that was imported from a non-signatory of the USMCA.
What are the rules of origin?
Rules of origin specify:
a. The requirements that a product must meet to determine which country it came from; and
b. How a product’s eligibility for receiving a tariff preference depends on it receiving originating status.
You can essentially use Rules of Origin to decide whether your products are entitled to a duty-free rate under the USMCA.
Article 4.2(a) of the USMCA provides an example of one such rule. It states that products are “originating” if, for instance, they are manufactured entirely in the territory of one of the signatories. Simply put, a product is “originating” from Mexico if the entirety of said product is manufactured in Mexico.
In cases that are more complex, for example, cases in which a product is manufactured in Mexico with materials that partially comes from other countries, it is important to read Chapter 4 of the USMCA, and understand what section applies to your case.
For example, Article 4.12: De Minimis states that a product is still originating in Mexico if the value of all non-Mexico originating materials is less than 10% of the value of the final good.
Do I need a certification of origin?
According to Article 5.2 of the USMCA, as well as the US ITA and the US Customs and Border Protection (CBP), importers may claim preferential tariff treatment and base it on a certification of origin that is filled out by an importer, exporter, or producer:
Article 5.2: Claims for Preferential Tariff Treatment
1. Each Party shall provide that an importer may make a claim for preferential tariff treatment, based on a certification of origin completed by the exporter, producer, or importer for the purpose of certifying that a good being exported from the territory of a Party into the territory of another Party qualifies as an originating good.
You must include the following nine data elements in your certification:
- Importer, Exporter, or Producer Certification of Origin
- Certifier
- Exporter
- Producer
- Importer
- Description and HS Classification of the Good
- Origin Criteria
- Blanket Period (if applicable)
- Authorized Signature and Date
The data elements stated above must be enough to indicate that the product for which you claim preferential treatment originates and meets USMCA Chapter 5’s requirements. The information you provide must describe the originating product in enough detail to allow for its identification.
How can I prove that the products are actually made in Mexico?
You can prove that the products are made in Mexico by providing a certification of origin, based on the required data elements stated in the previous section.
