USMCA Goes Into Effect July 1

The U.S.-Mexico-Canada Agreement (USMCA) is set to go into effect on July 1. The trade deal, which replaces the 26-year-old North American Free Trade Agreement (NAFTA), was originally postponed from its June 1 start date due to coronavirus-related disruptions that caused U.S., Mexican and Canadian officials to miss a March 31 deadline necessary for that target date. For merchandise that entered into commerce on or before June 30, NAFTA rules will continue to apply.

NAFTA has been in place since 1994 and represents approximately $1.2 trillion in trade among the three countries. The USMCA’s provisions update NAFTA in several areas, including modernized intellectual property protection, digital trade and financial services markets, labor, environmental protection and other areas, and provide new enforcement mechanisms.

On June 30, U.S. Custom and Border Protection issued updated implementation instructions for the agreement. These instructions contain guidance on the new requirements under the USMCA, including specifics on claiming USMCA preferential treatment for goods. For more information, click here.

Although USMCA, once in effect, will end constant trade negotiations between the three countries, disputes on certain issues still remain. The Trump Administration is considering imposing a 10-percent tariff on aluminum imported from Canada if the country does not curtail its aluminum exports to the U.S.

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