The United States-Mexico-Canada Agreement (USMCA) [also known as the Canada-United States-Mexico Agreement (CUSMA) or Tratado entre México, Estados Unidos y Canadá (T-MEC)] will go into effect July 1, 2020. This will supersede the 26-year-old North American Free Trade Agreement (NAFTA).
The USMCA comes with a new de minimis threshold for Canada that only applies to shipments from either the U.S. and Mexico that are facilitated by express carriers and customs brokers, not the postal network. For instance, shipments sent from the U.S. via USPS and brought in through Canada’s postal service (Canada Post) will continue to be subject to the current de minimis threshold under NAFTA ($20 CAD). Therefore, any item shipped via Canada Post with a value that exceeds $20 CAD will be subject to both duties and taxes.
The changes to the de minimis for Canada and Mexico include:
- $20 CAD for postal shipments (unchanged)
- $40 CAD for tax and duty relief for express shipments (new)
- $150 CAD for duty-only relief for express shipments (new)
- $300 USD for postal shipments (unchanged)
- $50 USD for tax and duty relief for express shipments (unchanged)
- Any shipment with a declared value of under US$50 pays no duty or tax
- Any shipment with a declared value of over US$50 and less than US$1,000 is subject to a Global Tax (Tasa Global) of 19% – this replaces the previous 16% IVA.
- $117 USD for duty-only relief for express shipments (new)
- Items with a declared valued between US$50 and US$117 that are of Canadian or USA ORIGIN* are subject to a Global Tax of 17%, instead of the 19% Global tax on non-USMCA goods
*The term “ORIGIN” is currently a point of uncertainty in the new regulation. We are waiting for clarification from Mexican Customs regarding their definition of ORIGIN as it pertains to the new regulations, as it’s not clear whether ORIGIN refers to goods that are made in the U.S. or Canada or goods that are sold and shipped from the U.s. and Canada.
These changes will impact you if you are shipping cross border and importing goods to Canada and/or Mexico from within North America. Keep in mind that there may be some goods which do not qualify for this tax and duty relief.
- Canada Border Services Agency
- U.S. Customs and Border Protection
- Government of Canada
- Mexico’s full General rules of Foreign Trade for 2020, updated 06/30/2020 (in Spanish)