USMCA Basics

October 1, 2020
USMCA Basics

The U.S. – Mexico – Canada Agreement (USMCA) entered into force on July 1, 2020, replacing the existing North American Free Trade Agreement (NAFTA). When exporting to Canada or Mexico, many U.S. companies want to take advantage of the benefits of the USMCA to eliminate tariffs for customers in these countries. This can often be a strong selling point and competitive advantage for U.S. products.

Schedule B Tariff Codes

For companies new to export or not familiar with the USMCA agreement, one of the first pieces of information required is the Schedule B code for your specific product. The Schedule B code is a 10-digit subset of HTS codes for U.S. exporters. A few important points:

  • Schedule B codes are maintained by the U.S. Census Bureau instead of the International Trade Commission
  • As with HTS codes (Harmonized Tariff Schedule), the first six digits of a Schedule B code should be the same as an HS number; however, the last four digits may be different than the HTS code

Rules of Origin

Why is it necessary to know this code? When a company wants to take advantage of the USMCA agreement when shipping to Mexico or Canada, it first needs to know the product(s) tariff code to determine the rules of origin under USMCA. The rules of origin are used to determine the origin of a product for a Free Trade Agreement, in this case USMCA. Many assume if a product is made in a factory in the USA that the product is “Made in the USA” and automatically qualifies, which is not the case. Qualification is dependent on whether a product meets the applicable rule of origin, and the first piece of information needed is the tariff code.

Don’t worry – there are resources to help!  

Starting out? Please feel free to contact the ITO for resources and guidance: Ms. Andrea Smith or 515.348.6240. These online resources are a great place for a new exporter to learn more about USMCA and Schedule B tariff codes.