USMCA Starts July 1, 2020

Starting on July 1, 2020, the U.S., Canada and Mexico will start a new trade agreement called the United States-Mexico-Canada Agreement (USMCA) which will be replacing what was formerly known as North American Free Trade Agreement (NAFTA).  The purpose of the agreement is to encourage trade between the three countries, ensure fair labor practices are followed and provide incentives for manufacturing in North America.

For online retailers, one of the key changes within this new agreement is the de minimis threshold values for express shipments (and via customs brokers) into Canada and Mexico from the U.S.

De minimis is a price threshold which countries use to determine if duties and taxes will be applied on shipments.  The de minimis threshold is different for each country, and is determined by the total value of your shipped goods, including shipping fees.  Online retailers like high de minimis thresholds for each country, since a higher threshold keeps duties and taxes from being added to the product cost for a buyer.  As an example, if the de minimis for Australia is $1000 USD, then we can ship items up to $1000 (including shipping cost) without incurring additional duties and taxes.  If the product cost plus shipping is over $1000 USD, then the buyer is going to have to pay additional costs (duties and taxes) to receive the product.

IMPORTANT!  Changes for de minimis starting on July 1, 2020 only applies to express shippers and custom brokers.  Shipments handled by the Postal Service are not changing!

Shipments Entering Canada

Postal Shipments de minimis (USPS delivery to Canada Post)

•  Goods valued over $20 CAD will have tax applicable (Unchanged)

Express Shipments/Custom Brokers de minimis

•   Goods valued over $40 CAD will have tax applicable (New with USMCA)

•   Goods valued over $150 CAD will have both duty and tax applicable (New with USMCA)

Shipments Entering Mexico

Postal Shipments de minimis (USPS delivery to Correos de México)

•   Goods valued over $300 USD will have tax applicable (Unchanged)

Express Shipments/Custom Brokers de minimis

• Goods valued over $50 USD will have tax applicable (Unchanged)

•  Goods valued over $117 USD will have both duty and tax applicable (New with USMCA)

Interested in lowering your international parcel shipments?  Contact GlobalPost and take advantage of free coverage, an easy claims process, no hassle of printing customs forms and more.