CUSMA Compliance:

Your Definitive Business Guide for North American Trade

Shipping is never without some degree of uncertainty. This is especially true

when shipping goods across borders.

Substantial changes have recently been made to the way cross-border trade
is conducted in North America. Such unprecedented fluidity in these
processes has left many business owners questioning how to proceed.

Freightcom’s experts have compiled this free guide to help in answering

those questions and to give you the information and resources you need to
continue to thrive even through an uncertain shipping landscape.

The information provided in this CUSMA Guideline is for general informational purposes only and does not constitute legal, tax, or
customs advice. While we strive to ensure accuracy, we make no guarantees and assume no responsibility for any errors, omissions,
or outcomes resulting from the use of this information. Customers are responsible for verifying requirements with the appropriate
customs authorities or trade professionals before shipping.

August 2025
Table of Contents
Understanding CUSMA – What It Means for Your Business 1
CUSMA’s Rules of Origin – The Key to Duty-Free Shipping 3
Market-Specific Compliance – What Changes by Destination 6
Documentation & Record-Keeping Essentials 10
Managing Compliance and Mitigating Risk 14

How to Use This Guide Effectively

This guide will walk you through what you need to know to trade confidently under CUSMA. You’ll learn:
• What makes a product CUSMA-compliant
• How to manage your documentation and recordkeeping
• Tips for working with customs brokers
• Where to find official resources and government help

It’s designed to be practical and easy to follow. However, some situations are complex—especially if you're
dealing with high-value goods or complicated supply chains. When in doubt, always talk to a customs broker or
trade professional.
Understanding CUSMA – What It Means for
Your Business
What is CUSMA?
The Canada-United States-Mexico Agreement (CUSMA), known in the US as USMCA, replaced the old
NAFTA trade agreement in 2020. It was designed to modernize North American trade, support economic
growth, and make it easier for businesses to move goods between the three countries.

For Canadian businesses, CUSMA keeps most goods duty-free between Canada, the U.S., and Mexico—but
only if you follow the rules. These include ensuring your products qualify under CUSMA's "rules of origin"
(i.e., where the product was made and where its parts come from).

What's New Compared to NAFTA?

While CUSMA keeps the core idea of free trade, it adds modern
rules for:

eCommerce and digital trade

Stronger protections for intellectual property
Labor and environmental standards
Support for small and medium-sized businesses (SMBs)

It’s more than an update—it’s a reset. So, if you’ve been relying on old NAFTA rules, now is the time
to rethink your compliance approach.

CUSMA Compliance - Your Definitive Business Guide for North American Trade Page 1
The Importance of Being
CUSMA-Compliant
Why Compliance is Good for
Business
If your goods qualify under CUSMA:

You can ship them duty-free or at reduced tariffs

You’ll benefit from fewer steps to determine
duties owed
You’ll build stronger, more stable supply chains
within North America
Your operations will be more predictable, helping
you plan better

All of this leads to lower costs, better customer

service, and increased competitiveness.

What Happens if You Don’t

Comply?
Non-compliance can be costly and damaging:
You risk extra tariffs (e.g., up to 35-40%
for transshipped goods)
Fines ranging from hundreds to tens
of thousands of dollars, especially if
mistakes aren’t corrected quickly
You may be billed retroactively with interest
for duties on past shipments
Revocation of CUSMA benefits regardless
of the qualification of your goods
You could face legal trouble, including
embargoes or even jail for serious violations

Compliance isn’t just about paperwork—it’s about

protecting your bottom line and your reputation.
CUSMA’s Rules of Origin – The Key to Duty-Free
Shipping
To qualify for duty-free or reduced tariffs under CUSMA, your goods must meet specific requirements known
as Rules of Origin (ROO). These rules prove that your product was made or significantly transformed in
Canada, the U.S., or Mexico.

The 4 Main Rules of Origin

1. Wholly Obtained (WO) – 100% North American
Some products are automatically considered "originating" if they are completely grown, produced, or
extracted in one of the three CUSMA countries.

Examples:
Fruits or vegetables grown in North America
Animals and fish raised or caught in North America
Minerals mined in North America
Goods made only from North American materials

If your product fits this category, it’s the simplest path to compliance.

2. Change in Tariff Classification (CTC) – Transformed Product

This rule applies when you use materials from outside North America but substantially change them during
manufacturing.
CUSMA uses the Harmonized System (HS) code to determine whether that change is big enough:
Change in Chapter (CC) = first 2 digits change
Change in Tariff Heading (CTH) = first 4 digits change
Change in Subheading (CTSH) = first 6 digits change

If you import oak wood (HS code 4407.91) from Europe

and manufacture a kitchen table (HS 9403.40) in Canada,
the shift in classification qualifies under this rule.

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3. Regional Value Content (RVC) – North American Value
With RVC, your product must contain a minimum percentage of value from within North America. This
includes the cost of materials, labour, and production done here.

Cars now require 75% North American content to qualify

—up from 62.5% under NAFTA.
This rule encourages sourcing and manufacturing within the region.

To prove compliance, businesses must analyze their costs and suppliers, and calculate their RVC using one of
two approved methods (build-up or build-down).

4. Specific Processing Requirements – Special Cases

Some goods need to undergo very specific manufacturing steps in North America to qualify.

Examples:

Shirts must be "cut and sewn" here

Steel products may need to be "melted and poured" in the region

These requirements vary by product, so it's important to check the specific rule for your goods.

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Getting the Classification Right – Why HS Codes
Matter
Every product shipped internationally must have a correct HS code—a global classification number that
describes what the product is.

CUSMA rules are tied directly to these codes, so:

The right HS code = the right rule of origin

The wrong code = possible penalties or loss of duty-free status

If you’re unsure of your product’s code, using tools like the Canada Tariff Finder or working with a
customs broker can help.

You can also request a binding advance ruling from U.S. Customs if you export to the U.S. This gives you
legal certainty about your product’s classification and origin status.

Dealing with Mixed Inputs – Fungible Goods and

Inventory Tracking
If your product uses interchangeable components from multiple sources (like screws, steel, or fabrics),
these are called fungible goods.

CUSMA allows you to manage these using standard inventory methods like:

FIFO (First-In, First-Out)

LIFO (Last-In, First-Out)
Average costing

However, you must track these inputs carefully. Poor inventory practices can result in denied claims, even if
most of your materials are compliant.

If your business deals with high-volume, mixed-source inputs, make sure you have:

A strong inventory management system

Documented procedures for tracking origin

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Market-Specific Compliance –
What Changes by Destination
While CUSMA creates a shared trade agreement across
Canada, the U.S., and Mexico, each country has its own
rules and procedures for imports.

To ship smoothly and avoid penalties, it’s important to

know what changes depending on where your goods
are going.

Shipping to Canada (Domestic or

Returned Goods)
Key Agency: Canada Border
Services Agency (CBSA)
CBSA is your main point of contact for import
regulations and CUSMA compliance in Canada. Helpful
tools and contacts include:

Canada Tariff Finder – Find HS codes and duty rates

Global Affairs Canada – Full CUSMA text and summaries

Trade Commissioner Service – Guides and expert help

CUSMA Rules of Origin Regulations – Legal text for compliance

Other Import Requirements

Certification of Origin: Must include 9 data elements
Labeling rules: “Made in Canada” = 51% domestic content;
“Product of Canada” = 98%
Recordkeeping: Keep all origin documents for 6 years

De Minimis Thresholds (for Courier

Shipments)
Duties exempt: for goods up to C$150
Taxes exempt (GST/HST/PST): for goods up to C$40
For shipments from non-CUSMA countries, the threshold is only C$20

CUSMA Compliance - Your Definitive Business Guide for North American Trade Page 6
 Shipping to the United States

Key Agency: U.S. Customs and Border Protection

(CBP)
CBP enforces USMCA (the U.S. version of CUSMA).
Canadian exporters should check:

01 USMCA Center - for guides and

templates

02 Uniform Regulations - for info on

textiles, customs procedures, etc.

03 Advance Rulings – Get certainty on

product classification or eligibility

Other Import Requirements

Presently, Mexico still has a de minimis, or a monetary value cap under which
shippers are not required to pay duties and/or taxes.

Claiming preference: U.S. importer is responsible for claiming CUSMA benefits

Certification of Origin: Must include 9 data points (can be on invoice or separate doc)
HS Code classification: Essential for proper rule application
Auto goods: Have special transitional rules (up to 5 years for full compliance)
Textiles: CUSMA allows Tariff Preference Levels (TPLs) for limited quantities
of non-originating textiles: must follow strict permit and certification rules
Recordkeeping: Importers must keep origin documents for 5 years

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 Shipping to Mexico

Key Agencies: SAT & ANAM

01 Sat.gob.mx – Oversees tax compliance

and customs revenue

02 Anam.gob.mx – Handles day-to-day

customs operations

03 Secretaría de Economía – Economic policy,

support for exporters

04 CUSMA Secretariat – For dispute resolution

De Minimis Thresholds:
Presently, Mexico still has a de minimis, or a monetary value cap under which
shippers are not required to pay duties and/or taxes.
Tax-free: up to US$50
Duty-free: up to US$117

These thresholds are lower than Canada, so plan

pricing and shipping carefully for eCommerce sales.

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Import Rules and Procedures
Certification of Origin:
Must contain the 9 required data points
Only the importer can be listed as the certifier (unlike Canada/U.S.)

Tightened enforcement:
Mexico’s Plan Maestro 2025 is increasing compliance audits
Watch out for HS misclassification, undervaluation, or late re-exports

Recordkeeping: Importers must keep records like Canada and the U.S.
Sensitive goods: Items like clothing, toys, health products, and perishables are
tightly regulated—non-compliance can result in seizures, fines,or even jail time

Quick Reference – CUSMA De Minimis Thresholds

Country General Threshold CUSMA Courier Imports Key Notes

(Duties & Taxes) (from US/MX)

Canada C$20 Duties exempt up to C$150; Alcohol, fuel,

(non-CUSMA countries) taxes up to C$40 and tobacco excluded

U.S. N/A N/A Formal entry starts

at US$2,500

Mexico Taxes up to US$50, duties N/A Lower thresholds = higher

up to US$117 shipping costs

CUSMA Compliance - Your Definitive Business Guide for North American Trade Page 9
Documentation & Record-Keeping Essentials
When it comes to CUSMA, having the right documents, and keeping them organized, isn't just red tape.
It’s your proof that your goods qualify for duty-free treatment. Without it, you risk audits, delays, fines, or
losing those tariff savings entirely.

The Certification of Origin: Your “CUSMA Passport”

01 To get the CUSMA tariff benefit, you need a Certification of Origin—a document
that proves your goods qualify under the agreement. The importer must have this
certificate at the time they declare the goods to customs.

What Needs to Be on the Certificate?

There’s no official form you must use, but the certificate must
include 9 required data elements (from Annex 5-A of CUSMA).
Should you miss one, your claim could be denied.

Here’s what must be included:

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 Pro Tip: You can place this info right on
your invoice - no separate form needed.
Just make sure all 9 elements are there.

Who Can Complete the Certificate?

02 One of the biggest changes under CUSMA is who can certify:

Exporter
Producer
Importer

This gives flexibility. However, Mexico only accepts the importer as

certifier—so if you're shipping to Mexico, make sure your buyer is aware of that.

Tips for Making It Easier

03 Templates Help: While not required, Canada Border Services Agency (CBSA) and U.S.
Customs (CBP) offer sample formats.
Use Blanket Certificates: If you’re shipping the same goods repeatedly, use a certificate
that covers up to 12 months. Just remember to update it if anything changes (supplier,
materials, production process).
Go Digital: Electronic submissions and e-signatures are generally accepted—and make life
easier.

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4. Back It Up: What Documents You Need to Keep
Customs agencies can audit your origin claims years later—so keeping good records is critical. If you're
audited, these documents will be your defense.
Here’s what you should keep:

All Certifications of Origin (ones you issue and receive)

Purchase Orders for raw materials/components
Bills of Materials (BOMs) showing what went into your product
Supplier Declarations of origin
Costing/Production Records (for goods requiring value calculations)
Shipping Records like bills of lading or airway bills
Export Documents related to the transaction
Internal Compliance Reviews or Audits

5. Record-Keeping: How Long and How to Store

You can’t just toss your records after shipping. CUSMA rules demand long retention periods.

Country Retention Period

Canada 6 years after export

U.S. 5 years after import/export

Mexico 5 years after import/export

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 Think of this as your “CUSMA audit trail.”
Keep it complete and easy to access.

Records must be:

Well-organized and easily accessible
Accurate and consistent
Stored securely—ideally in a digital system for quick access
If customs calls, you need to retrieve documents fast. Poor record-keeping slows things down—and
can lead to penalties.

Final Word: Your Records Are Your Shield

Even if you qualify for CUSMA benefits, you’ll need to prove it—not just once, but potentially years
after the shipment.
The takeaway?
Build a system that captures every required document
Store it digitally, securely, and accessibly
Review and update your certifications regularly

Compliance isn’t a one-time checklist—it’s an ongoing part of doing cross-border business right.

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Managing Compliance and Mitigating Risk
Effective compliance under CUSMA is not a one-time task but a continuous, proactive process.
Canadian businesses must implement structured internal controls, maintain constant vigilance,
and employ strategic risk mitigation to sustain compliance and minimize exposure.

A. Proactive Compliance Program Elements

A strong internal compliance program is foundational for Canadian companies engaged in North American
trade. It integrates CUSMA compliance into everyday operations and builds a culture of accountability.

• Internal Controls and Due Diligence

Businesses should implement rigorous internal controls, guided by frameworks such as the COSO
Internal Control—Integrated Framework, which emphasizes control over data integrity and risk.
Due diligence is especially critical—suppliers and third parties in the supply chain should be vetted
thoroughly, including verification of credentials, financial health, cybersecurity standards, and
regulatory compliance. This front-end scrutiny ensures the entire supply chain supports CUSMA
origin requirements.

• Regular Internal Audits

Periodic internal audits or self-assessments help businesses identify and resolve compliance issues
before they attract customs scrutiny. These reviews are particularly valuable for validating origin
determinations, verifying documentation, and correcting procedural weaknesses.

• Staff Training and Awareness

Continuous, role-specific training for employees involved in international trade—from procurement
and production to sales and logistics—is essential. Well-informed staff reduce the risk of inadvertent
non-compliance and reinforce a company-wide culture of regulatory adherence.

• Compliance Software and Systems

Leveraging trade compliance software or integrated systems streamlines documentation, automates
key processes, and flags potential inconsistencies. These tools improve both efficiency and accuracy
in managing complex CUSMA-related workflows.

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 B. Responding to Customs Audits and Verifications
Even with robust preventative measures, businesses may still be selected for customs audits
or verifications. A prompt and strategic response is essential to minimize risk and disruption.

Understanding the Verification Process

Customs authorities—including CBSA (Canada), CBP (U.S.), and SAT (Mexico)—conduct a range
of verifications. These include random audits, targeted investigations based on risk indicators,
Requests for Information (RFIs), and on-site inspections of production facilities, inventory, and
record systems. In complex supply chains, supplier audits are also common, especially for
verifying the origin of specific inputs.

Best Practices for Responding to Audits

Upon receiving an audit notice, a timely and transparent response is critical. Delayed or
non-cooperative actions can escalate the matter and increase liability. Businesses should
immediately compile and review relevant documentation—commercial invoices, packing lists,
bills of lading, purchase orders, production and costing records, and particularly the
Certification of Origin and supporting data. If inconsistencies are found, a well-prepared
explanation or a voluntary prior disclosure may mitigate penalties. Engaging a customs broker
or trade compliance specialist can streamline communication with authorities and ensure full,
accurate responses. For Canadian businesses, specialized services such as Cole International’s
Audit Response Unit (ARU) can act as intermediaries, interpret regulatory correspondence,
and help challenge CBSA determinations.

Navigating the Appeals Process

In cases of denied preferential treatment or imposed penalties, businesses have the right to
appeal within the respective country’s customs system. A qualified trade compliance expert or
customs attorney can guide businesses through appeals or protest processes and negotiate for
reduced penalties where applicable.

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C. Risk Mitigation Strategies
In addition to core compliance efforts, businesses can adopt broader risk mitigation tactics
to strengthen their CUSMA positions.

Advance Rulings
Seeking advance rulings from CBSA or CBP provides legally binding decisions on HS classification
and origin eligibility, offering clarity and reducing the likelihood of future disputes.

Supplier Agreements and Indemnification

Importers should embed strong indemnification clauses in contracts and purchase orders, holding
suppliers accountable for incorrect or invalid Certifications of Origin. These agreements should also
include cooperation clauses requiring supplier assistance in the event of an origin audit. This shifts
some of the risk upstream and reinforces shared responsibility.

Alternative Sourcing Strategies

If certain inputs prevent a product from qualifying under CUSMA Rules of Origin, businesses should
explore alternative sourcing within Canada, the U.S., or Mexico. Enhancing North American content
not only facilitates qualification for preferential treatment but also insulates businesses from future
origin challenges.

Continuous Monitoring and Adaptation

CUSMA remains a living agreement. The upcoming 2026 review and evolving tariff
policies—including exemptions for qualifying goods—underscore the importance of staying
informed. Businessesmust monitor regulatory updates, trade policy shifts, and industry
developments.

A comprehensive CUSMA compliance strategy is more than a defensive measure—it is a competitive

differentiator. By embedding compliance into operational processes, proactively managing supply chain risks,
and preparing for audits before they occur, Canadian businesses can not only minimize penalties but also
solidify their long-term position in the North American marketplace.

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Conclusion: Sustaining Trade Advantage
in North America
CUSMA represents a cornerstone of North American economic integration, offering Canadian businesses
significant opportunities—provided they can effectively manage its complexity. This guide has highlighted
the key dimensions of CUSMA compliance, including its evolution from NAFTA, the critical function of Rules
of Origin, country-specific procedures, documentation requirements, and strategies for risk mitigation.

CUSMA compliance is not a one-time task but an ongoing, adaptive process. Accurate HS classification and
strict adherence to Product-Specific Rules of Origin (PSROs) form the basis of preferential tariff eligibility.
Canadian companies must also stay alert to procedural nuances and enforcement trends, especially Mexico’s
heightened scrutiny and specific certification requirements.

Robust documentation practices—centered on the Certification of Origin and its supporting records—are
essential. These serve not only as legal validation for tariff preferences but also as the audit trail that protects
against compliance challenges and penalties.

Ultimately, a proactive compliance strategy—built on internal controls, staff training, due diligence, regular
audits, and readiness for customs verification—is critical. It enables Canadian businesses not just to avoid
costly errors, but to fully realize the trade benefits CUSMA provides.

As the 2026 CUSMA review approaches, continued vigilance, agility, and investment in compliance capacity
will be key to maintaining a competitive edge and contributing to sustained economic growth in the North
American marketplace.

CUSMA Compliance - Your Definitive Business Guide for North American Trade Page 18
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