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Why some Canadian goods don’t get tariffed
Trump officials told us this morning that the new tariff rate proposed by the U.S. president won’t impact products that comply with the Canada-U.S.-Mexico free trade agreement, known as CUSMA. But how does the CUSMA exception actually work?
For an imported good to qualify for tariff-free treatment under CUSMA, it has to comply with the agreement’s “rules of origin” — a set of standards that determine how much of the good should be produced in North America.
Even if the good meets the rules of origin, that doesn’t make it automatically exempt from tariffs. The importer still has to produce or obtain a document that certifies the origin of the goods.
There are general rules of origin, and rules of origin that are specific to certain products. Vegetables harvested or minerals mined in Canada are subject to a “wholly obtained” rule of origin.
Others are considered “originating” in North America if they meet product-specific rules.
A finished product might be classified differently under CUSMA than the materials that are used to make the product (for example, a wooden table that is made from oak imported from outside North America).