United States — Rules of Origin & FTAs

U.S. Customs and Border Protection applies two distinct regimes of rules of origin, depending on whether an importer seeks reduced-duty treatment under a free-trade agreement or other preferential program. The non-preferential rules determine country of origin for goods imported from any trading partner (normally receiving most-favored-nation or "MFN" treatment), and govern duty-rate assignment, country-of-origin marking under 19 U.S.C. § 1304, quota administration, antidumping and countervailing duty measures, government procurement eligibility, and trade-remedy actions such as Section 301 tariffs. The preferential rules determine whether a good qualifies as "originating" under a specific free-trade agreement (FTA) or unilateral preference program (e.g., the Generalized System of Preferences, the African Growth and Opportunity Act), thereby qualifying for zero or reduced duty.

Non-preferential rules — the substantial-transformation standard. For goods not wholly the growth, product, or manufacture of a single country, U.S. non-preferential schemes employ a substantial-transformation test, applied on a case-by-case basis and rooted in judicial precedent: an article consisting in whole or in part of materials from more than one country is deemed a product of the country in which it has been substantially transformed into a new and different article of commerce with a name, character, and use distinct from that of the article or articles from which it was so transformed. This name-character-use method has been criticized by the trade community as subjective, lacking transparency, and producing inconsistent results across similar fact patterns.

For goods imported from Canada or Mexico that do not qualify for preferential treatment under the United States–Mexico–Canada Agreement (USMCA), CBP has applied since July 1, 2020 the tariff-shift rules in 19 C.F.R. Part 102 (originally promulgated for NAFTA country-of-origin marking) to determine the country of origin for marking purposes under 19 C.F.R. § 134.11. In July 2021 CBP proposed to extend the Part 102 tariff-shift methodology to all non-preferential origin determinations for Canadian and Mexican goods — including determination of the country of origin for Section 301 and other tariff actions, quota administration, and government procurement — in order to reduce administrative burden and harmonize what had been two parallel non-preferential standards (substantial transformation for duty and quota, tariff shift for marking). Under the proposed rule, all non-preferential country-of-origin determinations by CBP for goods imported from Canada or Mexico would be based on substantial transformation pursuant to the tariff-shift rules required by Part 102, eliminating the dual-standard problem that had burdened importers since USMCA entered into force.

Preferential rules — tariff shift, regional value content, and other criteria. Preferential rules are product-specific and agreement-specific. Each FTA (USMCA, U.S.–Korea FTA, CAFTA–DR, etc.) and each unilateral program establishes its own definition of "originating," typically requiring one or more of the following: (a) the good is wholly obtained or produced entirely in the territory of one or more FTA partners; (b) non-originating materials undergo a prescribed change in tariff classification ("tariff shift") when incorporated into the good; (c) the good satisfies a regional value content (RVC) threshold, measured by methods such as transaction value, net cost, build-down, or build-up formulas; or (d) the good meets a process rule specific to the product (e.g., chemical-reaction rules for chemicals, yarn-forward or fiber-forward rules for textiles and apparel). Many FTAs permit de minimis tolerances (disregarding a small percentage of non-originating materials that fail the tariff-shift test) and impose additional requirements such as direct shipment from one FTA party to another.

Importer responsibility and advance rulings. The Customs Modernization Act (Title VI of Pub. L. 103-182) shifted the primary burden of compliance from CBP to the importer of record. The importer must exercise "reasonable care" to enter, classify, and value merchandise correctly, including determining whether a preferential rule of origin applies. When origin is uncertain, importers may request binding advance rulings from the CBP Office of Regulations and Rulings under 19 C.F.R. Part 177, which can accelerate clearance and mitigate penalty exposure. Because the distinction between non-preferential and preferential regimes affects the rate of duty, admissibility, quota application, and marking requirements, misclassifying the applicable framework can trigger duty underpayment, quota overage, and Section 592 penalty liability.

Source: 19 C.F.R. Part 102 — Rules of Origin Source: 19 C.F.R. § 134.11 — Country of origin marking required Source: Federal Register, July 6, 2021 — Non-Preferential Origin Determinations for Merchandise Imported From Canada or Mexico Source: CBP, Preferential Rules of Origin (ICP-026)

The United States–Mexico–Canada Agreement requires most goods to meet a regional value content (RVC) threshold to qualify as originating. Under USMCA Article 4.5 and the implementing regulations codified in the Uniform Regulations (Appendix A to 19 C.F.R. Part 182), the producer, exporter, or importer may select between two calculation methodologies: the transaction-value method and the net-cost method. Each method measures the percentage of North American content but uses a different base and yields different threshold requirements.

Transaction-value method. The transaction-value formula is:

RVC = [(TV – VNM) / TV] × 100

where RVC is the regional value content expressed as a percentage; TV is the transaction value of the good, adjusted to exclude any costs incurred in the international shipment of the good; and VNM is the value of non-originating materials (including materials of undetermined origin) used by the producer in the production of the good.

Transaction value is defined in USMCA Article 4.1(40) as the price actually paid or payable for a good with respect to a transaction of the producer of the good, adjusted in accordance with the principles of Articles 8(1), 8(3), and 8(4) of the WTO Customs Valuation Agreement. For goods classified in Chapters 50 through 63 (textiles and apparel), Chapter 69 (ceramic products), Chapter 83 (miscellaneous articles of base metal), Chapter 87 (vehicles other than passenger vehicles and light trucks covered by the Automotive Appendix), and most other chapters where the product-specific rule in Annex 4-B specifies an RVC requirement, a good qualifies as originating if its RVC is not less than 60 percent when the transaction-value method is used. This method is typically simpler to administer because it relies on the invoice price actually paid for the good and for materials, but it counts the producer's overhead, selling expenses, and profit as territorial content; the required percentage under the transaction-value method is therefore higher than the threshold for the net-cost method.

Net-cost method. The net-cost formula is:

RVC = [(NC – VNM) / NC] × 100

where RVC is the regional value content expressed as a percentage; NC is the net cost of the good; and VNM is the value of non-originating materials.

Net cost is defined in USMCA Article 4.1(26) and section 2 of the Uniform Regulations as total cost minus sales promotion, marketing and after-sales service costs; royalties; shipping and packing costs; and non-allowable interest costs (interest costs that exceed 700 basis points above the applicable federal government interest rate identified in the Uniform Regulations). For the same categories of goods, a good qualifies as originating if its RVC is not less than 50 percent when the net-cost method is used. Because the denominator is smaller—excluding certain non-production costs—the net-cost method can be advantageous when the producer's marketing and distribution expenses are high, but it requires more detailed cost accounting.

Mandatory use of the net-cost method. USMCA Article 4.6 and section 7(3) of the Uniform Regulations require that the net-cost method be used exclusively in the following circumstances:

• There is no transaction value for the good (for example, the good is transferred between related parties without a sale, or the transaction value is unacceptable under Article 1 of the WTO Customs Valuation Agreement).
• The product-specific rule in USMCA Annex 4-B for that tariff classification does not provide a rule based on the transaction-value method.
• For passenger vehicles and light trucks subject to the Automotive Appendix (Appendix to Annex 4-B), which carry an elevated RVC threshold of 75 percent under the net-cost method, phased in over three years beginning July 1, 2020 (66.67% in year 1, 69.44% in year 2, 72.22% in year 3, 75% in year 4 and thereafter). Passenger vehicles and light trucks must also separately satisfy Labor Value Content, North American steel-and-aluminum purchasing, and core-parts requirements; those are additional qualifying conditions, not components of the RVC calculation itself.
• For automotive parts classified in the tables appended to the Automotive Appendix (Tables A.1, B, and C), which carry RVC thresholds ranging from 62.5 to 75 percent under the net-cost method depending on the part category and phase-in schedule.
• When the producer chooses to use accumulation under section 11 of the Uniform Regulations (treating regional value added by suppliers of non-originating materials as part of the good's RVC, thereby reducing VNM) or designates an intermediate material under section 12 (a self-produced originating component whose entire value is then counted as originating in the final good's RVC calculation).

Importer, exporter, or producer may calculate. USMCA expanded responsibility for RVC calculation beyond the exporter or producer to include the importer. Under 19 C.F.R. § 182.11(b) and § 182.12, the certification of origin may be completed by the importer, exporter, or producer, and the certifying party assumes responsibility for proving the RVC calculation and maintaining supporting records for a minimum of five years from the date of importation. This shift reflects the Customs Modernization Act's reasonable-care standard: the importer of record is primarily responsible for the accuracy of the entry, classification, and origin determination.

Verification and penalty exposure. CBP may verify RVC calculations through written questionnaires, requests for information, visits to the premises of the producer or exporter, or other means prescribed in USMCA Chapter 5 (Origin Procedures) and 19 C.F.R. Part 182, Subpart G. If the RVC calculation is found to be incorrect and the good does not meet the applicable threshold, CBP will deny preferential tariff treatment and assess duty at the most-favored-nation rate (or, if applicable, a Section 301 or Section 232 additional-duty rate), plus interest under 19 U.S.C. § 1505(d). Negligent or fraudulent misstatements of origin may trigger penalties under 19 U.S.C. § 1592, which authorizes civil penalties ranging from the domestic value of the merchandise (for fraud) to the lesser of the domestic value or four times the duties, taxes, and fees of which the United States was or could have been deprived (for gross negligence).

Source: 19 C.F.R. Part 182, Appendix A — Rules of Origin Regulations (USMCA Uniform Regulations) Source: CBP, USMCA Fact Sheet: Regional Value Content Source: USMCA Chapter 4 — Rules of Origin, Articles 4.5 and 4.6

Every USMCA origin determination for goods containing non-originating materials begins with the product-specific rule of origin set forth in USMCA Annex 4-B, which is organized by Harmonized Tariff Schedule (HTS) heading and subheading. The product-specific rule prescribes the requirements that non-originating materials must satisfy in order for the good to qualify as "originating" under USMCA Article 4.2(c). These requirements may include a change in tariff classification (commonly called a "tariff shift"), a regional value content (RVC) threshold, a production process, or a combination of these criteria. A good that is wholly obtained or produced entirely in Canada, Mexico, or the United States under USMCA Article 4.2(a), or produced exclusively from originating materials under Article 4.2(b), is originating without reference to Annex 4-B.

Structure and application of tariff-shift rules. Annex 4-B is organized by HTS chapter and contains one rule per heading or subheading. The tariff-shift rule specifies the minimum degree of transformation that non-originating materials must undergo to confer origin. Typical formulations include:

• "A change to heading XX.XX from any other chapter" — the most restrictive rule, requiring that all non-originating materials be classified in a different HTS chapter before processing in a USMCA country.
• "A change to heading XX.XX from any other heading" — requiring materials to shift from a different four-digit heading.
• "A change to subheading XXXX.XX from any other subheading" — requiring materials to shift from a different six-digit subheading (a more permissive rule, allowing materials from the same heading if classified in different subheadings).
• "A change to subheading XXXX.XX from any other heading, except from heading YY.YY or subheading ZZZZ.ZZ" — a qualified tariff shift that excludes certain inputs (commonly used in textiles and apparel to exclude key components such as fabric or yarn originating outside North America).

Only non-originating materials must satisfy the tariff shift. Under section 3, subsection (1), General Interpretative Note (d) of the USMCA Uniform Regulations (codified in Appendix A to 19 C.F.R. Part 182), a change in tariff classification applies only to non-originating materials. Originating materials may remain in the same tariff provision as the finished good without violating the tariff-shift rule. This principle is critical when a producer sources both originating and non-originating components: the compliance analysis isolates the non-originating materials and tests whether each has undergone the prescribed tariff change as a result of production in a USMCA country.

Example application: T-shirts and the yarn-forward rule. The Uniform Regulations illustrate the operation of tariff-shift rules with multiple examples. For a T-shirt of subheading 6109.10 made from knit fabric containing non-originating polyester filaments of heading 54.02, the product-specific rule in Annex 4-B requires that non-originating materials shift from outside specified textile chapters. If the polyester filaments of heading 54.02 are excluded under the rule (i.e., the rule does not permit a change from certain textile inputs such as filaments classified in Chapter 54), then the non-originating filaments fail the tariff-shift test, and the T-shirt does not qualify as originating on the basis of the tariff shift alone. This structure enforces the yarn-forward principle in USMCA textiles: fabric must be formed in North America from yarn that is also formed in North America (or that qualifies under a specific textile tolerance, such as the 10 percent de minimis rule for fibers and yarns in USMCA Article 6.6).

RVC requirements in product-specific rules. Many product-specific rules in Annex 4-B prescribe an RVC threshold in addition to, or in lieu of, a tariff shift. For example, the rule may state "A change to heading XX.XX from any other heading, provided there is a regional value content of not less than 50 percent under the net cost method" or, for goods eligible for the transaction-value method, "not less than 60 percent." When a product-specific rule contains both a tariff-shift requirement and an RVC requirement, the good must satisfy both unless the rule is written in the alternative (e.g., "A change to heading XX.XX from any other chapter; or no change in tariff classification is required, provided there is a regional value content of not less than 60 percent"). The RVC calculation methods—transaction value and net cost—are detailed in USMCA Article 4.5 and the implementing regulation at 19 C.F.R. Part 182, Appendix A, section 5.

Component-determines-classification rule for textiles and apparel. USMCA Chapter 6 (Textile and Apparel Goods) and the corresponding Chapter Notes in Annex 4-B, Section C, Schedule I, introduce a special interpretative rule for goods classified under Chapters 61 and 62 (apparel). Under Note 2 to Chapter 62 of Schedule I, the applicable tariff-shift rule applies only to the component that determines the tariff classification of the good, and that component must satisfy the tariff-change requirements set out in the rule. This means that for a men's suit of subheading 6203.12, the importer or producer must identify which fabric component (e.g., the outer shell, the visible lining, or pocket bags) determines the tariff classification under the General Rules of Interpretation (typically the component that constitutes the predominant weight or character), and only that component's non-originating materials must undergo the prescribed tariff shift. This interpretative note reduces compliance burden for complex apparel goods with multiple fabric components and reflects the negotiated balance between liberalizing intra-NAFTA apparel trade and preserving the yarn-forward or fabric-forward disciplines.

General Interpretative Notes and Chapter Rules. The product-specific rules in Annex 4-B, Schedule I, are prefaced by General Interpretative Notes and Chapter Rules that modify or clarify the application of individual rules. Practitioners must read the General Interpretative Notes (particularly Note (d) on the application of tariff shifts to non-originating materials only, and Note (e) on the treatment of sets and retail packaging) alongside the product-specific rule. Chapter Rules appear at the head of each HTS chapter in Schedule I and may, for example, define terms, prescribe RVC calculation methodologies for that chapter, or allow the use of intermediate materials or accumulation. Failure to apply these interpretative notes can result in an incorrect origin determination, denial of preferential treatment, and assessment of duty at the most-favored-nation (MFN) or additional-duty rate (such as Section 301 or Section 232 tariffs).

Where to find the product-specific rules. The complete text of Annex 4-B, Product-Specific Rules of Origin, is published by the Office of the United States Trade Representative and is incorporated by reference into General Note 11(o) of the Harmonized Tariff Schedule of the United States. The USMCA Uniform Regulations, including the General Interpretative Notes, Chapter Rules, and worked examples, are codified in Appendix A to 19 C.F.R. Part 182. CBP has also published a side-by-side comparison of FTA product-specific rules to assist importers navigating multiple preferential programs. Importers uncertain about the correct tariff classification of a good or the interpretation of a product-specific rule may request a binding advance ruling from CBP's Office of Regulations and Rulings under 19 C.F.R. Part 177.

Verification and compliance. Under USMCA Chapter 5 (Origin Procedures) and 19 C.F.R. Part 182, Subpart G, CBP may verify whether a good satisfies the product-specific rule of origin by written questionnaire, site visit, or other means. The importer, exporter, or producer must maintain records demonstrating that the applicable tariff-shift and RVC requirements were met for a minimum of five years from the date of importation. If CBP determines that the product-specific rule was not satisfied, the good is not originating, preferential tariff treatment is denied, and duty is assessed at the applicable MFN or additional-duty rate, plus interest under 19 U.S.C. § 1505(d). Misstatements of origin may also trigger civil penalties under 19 U.S.C. § 1592.

Interaction with recent tariff actions. As of March 2025, the Executive Branch has imposed additional tariffs under the International Emergency Economic Powers Act (IEEPA) on goods imported from Canada and Mexico that do not satisfy USMCA rules of origin, underscoring the penalty for failure to meet the product-specific requirements in Annex 4-B. Goods that qualify for USMCA preferential treatment by satisfying the applicable tariff-shift and RVC rules are exempt from the IEEPA additional duties; goods that fail the product-specific rule pay both the MFN duty and the IEEPA additional tariff. This dual-duty exposure has heightened the compliance stakes for USMCA origin determinations in 2025 and 2026.

Source: USMCA Chapter 4 — Rules of Origin, Annex 4-B (Product-Specific Rules of Origin) Source: 19 C.F.R. Part 182, Appendix A — Rules of Origin Regulations (USMCA Uniform Regulations) Source: CBP, USMCA FAQs — Tariff Shift Rules

An importer claiming USMCA preferential tariff treatment must possess a certification of origin at the time the claim is made and must submit a copy to U.S. Customs and Border Protection upon request. Unlike NAFTA, which required a uniform Certificate of Origin on CBP Form 434 that could be completed only by the exporter or producer, USMCA permits the importer, exporter, or producer to complete the certification and imposes no prescribed form. The certification must be in writing or transmitted electronically pursuant to any electronic means authorized by CBP, may be provided on an invoice or any other document (except an invoice or commercial document issued in the territory of a non-USMCA country), and must include nine minimum data elements to be valid under 19 C.F.R. § 182.12(a).

The nine minimum data elements required under 19 C.F.R. § 182.12(a)(4) for a valid USMCA certification of origin are:

1. Identification of the certifier — whether the certifier is the importer, exporter, or producer.
2. Certifier contact information — the certifier's name, title, address (including country), telephone number, and email address.
3. Exporter information — the exporter's name, address (including country), email address, and telephone number. This information is not required if the producer is completing the certification and does not know the identity of the exporter; the address of the exporter shall be the place of export in a USMCA country's territory under 19 C.F.R. § 182.12(b)(1).
4. Producer information — the producer's name, address (including country), email address, and telephone number. Under 19 C.F.R. § 182.12(c), a person who wishes to keep producer information confidential may state "Available upon request by the importing authorities"; the address of the producer shall be the place of production in a USMCA country's territory under § 182.12(b)(2).
5. Importer information — the importer's name, address (including country), email address, and telephone number, if known. The importer address must be in a USMCA country's territory under § 182.12(b)(3). If the exporter or producer does not know the identity of the importer, the certifier may state "Unknown."
6. Description and HS classification — a description of the good and the Harmonized System classification to the six-digit level.
7. Origin criterion — the applicable origin criterion under USMCA Annex 4-B (wholly obtained, tariff shift, regional value content threshold, or other product-specific rule).
8. Blanket or single-shipment indicator — whether the certification covers a single shipment or multiple shipments of identical goods within a specified blanket period.
9. Authorized signature and date — the certification must be signed and dated by a responsible official of the importer, exporter, or producer, or by the authorized agent of the importer, exporter, or producer having knowledge of the relevant facts, under § 182.12(d).

The certification must be completed in English, French, or Spanish; if not in English, CBP may require the importer to submit an English translation under 19 C.F.R. § 182.12(e).

Basis for completing a certification. Under 19 C.F.R. § 182.12(f)(1), a certification of origin may be completed by the importer, exporter, or producer on the basis of (i) the certifier having information, including documents, that demonstrate that the good is originating, or (ii) in the case of an exporter who is not the producer of the good, reasonable reliance on the producer's written representation, such as in a certification of origin, that the good is originating. CBP may not require that an exporter or producer complete a certification of origin or provide a certification or written representation to another person under § 182.12(f)(2); however, the importer of record is primarily responsible for the accuracy of the claim under the reasonable-care standard established by the Customs Modernization Act (Title VI of Pub. L. 103-182).

Validity and blanket coverage. A certification of origin that is properly completed, signed, and dated in accordance with the requirements of 19 C.F.R. § 182.12 will be accepted as valid for four years following the date on which it was completed, under § 182.12(h). The certification may be applicable to (a) a single shipment of goods into the United States (which may consist of a single shipment that results in the filing of one or more entries, or more than one shipment that results in the filing of one entry), or (b) multiple shipments of identical goods into the United States that occur within a specified blanket period, not exceeding twelve months, set out in the certification, under § 182.12(g).

Recordkeeping obligations. The importer who claims USMCA preferential tariff treatment must maintain for a minimum of five years from the date of importation all records and documents that demonstrate the good qualifies for preferential treatment, including the certification of origin and records related to transit and transshipment, under 19 C.F.R. § 182.13(a). For importers who completed the certification themselves, 19 U.S.C. § 1508(b)(4)(A)(ii) requires retention of all records and supporting documents related to the origin of the good (including the certification or copies thereof). For exporters or producers who complete a USMCA certification of origin or provide a written representation for a good exported from the United States to a USMCA country, 19 U.S.C. § 1508(b)(2) and (b)(5)(A) require that records be kept for at least five years after the date on which the certification is completed. Records include the purchase, cost, value, and shipping of, and payment for, the good; the purchase, cost, value, and shipping of, and payment for, all materials, including indirect materials, used in the production of the good; and the production of the good in the form in which it was exported or the production of the material in the form in which it was sold.

Verification, correction, and penalty exposure. CBP may verify a claim for preferential tariff treatment through written questionnaires, requests for information, visits to the premises of the producer or exporter, or other means prescribed in USMCA Chapter 5 and 19 C.F.R. Part 182, Subpart G. If CBP requests the certification of origin under § 182.12(a) and the importer does not provide it, or if the certification is determined to be invalid or based on inaccurate information and is not corrected within the time period prescribed in 19 C.F.R. § 182.11(c), preferential tariff treatment will be denied and duty will be assessed at the most-favored-nation rate (or, if applicable, an additional-duty rate imposed under Section 301, Section 232, or other legal authority), plus interest under 19 U.S.C. § 1505(d). Under 19 C.F.R. § 182.123(a), an importer who makes a corrected claim will not be subject to civil or administrative penalties under 19 U.S.C. § 1592 for having made an incorrect claim or submitted an incorrect certification of origin, provided the corrected claim is promptly and voluntarily made before the commencement of a formal investigation under 19 C.F.R. § 162.74(g) and is accompanied by a tender of any actual loss of duties and merchandise processing fees. Negligent or fraudulent misstatements of origin may trigger civil penalties under 19 U.S.C. § 1592, which authorizes penalties ranging from the domestic value of the merchandise (for fraud) to the lesser of the domestic value or four times the duties, taxes, and fees of which the United States was or could have been deprived (for gross negligence).

Low-value exemption. Under 19 C.F.R. § 182.21(b), an importer is not required to have a certification of origin in its possession for a good whose value does not exceed USD 2,500 (or its equivalent in the currency of another USMCA country), provided the importer makes a written declaration that the good qualifies as an originating good. The USD 2,500 threshold does not apply to certain goods excluded under § 182.21(c), including alcoholic beverages classified in Chapter 22 of the Harmonized Tariff Schedule, tobacco products classified in Chapter 24, and goods for which the importer claims USMCA preferential treatment under a tariff preference level.

Automotive goods — additional certifications. Passenger vehicles, light trucks, and heavy trucks subject to the USMCA Automotive Appendix (Appendix to Annex 4-B) require not only a certification of origin but also separate certifications from the vehicle producer demonstrating compliance with the Labor Value Content (LVC) requirement, the North American steel-and-aluminum purchasing requirement, and the core-parts requirement. These automotive certifications must be submitted to CBP via the USMCA Portal and a unique identifier must be included in the entry summary document to claim preferential treatment, under regulations codified at 19 C.F.R. Part 182, Subpart I. Interim final rules published in the Federal Register on July 6, 2021 (86 FR 35565, effective July 6, 2021) and January 17, 2025 (90 FR 6486, effective March 18, 2025, with a delayed compliance date of May 19, 2025 for certain vehicle certification requirements) establish detailed procedural requirements for these automotive-specific certifications. Failure to timely submit the required automotive certifications will result in denial of preferential tariff treatment for covered vehicles.

Source: 19 C.F.R. § 182.12 — Certification of origin Source: 19 C.F.R. § 182.11 — Claim for preferential tariff treatment Source: 19 C.F.R. § 182.13 — Maintenance of records Source: 19 C.F.R. § 182.21 — Waiver of certification of origin requirement Source: 19 U.S.C. § 1508 — Recordkeeping Source: CBP, USMCA FAQs — Certification of Origin

The United States–Mexico–Canada Agreement permits a good containing non-originating materials that fail the applicable tariff-shift requirement to qualify as originating under a de minimis tolerance if the value of all such non-originating materials does not exceed 10 percent of the transaction value or total cost of the good. This rule, codified in USMCA Article 4.12 and implemented in section 5 of the USMCA Uniform Regulations (Appendix A to 19 C.F.R. Part 182), operates as a compliance safety valve: when a small percentage of non-originating materials cannot satisfy the product-specific tariff-shift rule in Annex 4-B, the good may still qualify for preferential tariff treatment provided the de minimis threshold is met and all other requirements (such as regional value content, if applicable) are satisfied.

De minimis for tariff-shift rules — subsection 5(1) of the Uniform Regulations. Under section 5(1) of the Uniform Regulations, a good is originating in the territory of a USMCA country if (a) the value of all non-originating materials that are used in the production of the good and that do not undergo an applicable change in tariff classification as a result of production occurring entirely in the territory of one or more USMCA countries is not more than 10 percent of the transaction value of the good, adjusted to exclude any costs incurred in the international shipment of the good, or, if the transaction value is unacceptable or there is no transaction value, 10 percent of the total cost of the good; and (b) if the good is also subject to a regional value content (RVC) requirement under the product-specific rule in Annex 4-B, the value of those non-originating materials is to be taken into account in calculating the RVC of the good. The second condition is critical: de minimis is not a waiver of the RVC requirement. The value of non-originating materials that are overlooked for purposes of the tariff shift under the de minimis rule must still be counted as non-originating in the numerator of the RVC formula (VNM), ensuring that they reduce the calculated regional value content.

De minimis for RVC-only rules — subsection 5(4). When a product-specific rule in Annex 4-B specifies only a regional value content requirement and no tariff-shift requirement, a good that is subject to that RVC requirement is originating and is not required to satisfy the RVC requirement if the value of all non-originating materials used in the production of the good is not more than 10 percent of the transaction value (adjusted to exclude international-shipment costs) or, where transaction value is unacceptable or unavailable, 10 percent of the total cost of the good. This second de minimis rule, codified in section 5(4) of the Uniform Regulations, is distinct from the tariff-shift de minimis in that it exempts the good from the RVC test altogether when non-originating content is negligible. It is an absolute waiver of the RVC requirement for low-value non-originating material, not a mere tolerance that permits counting the materials as originating.

Exceptions to de minimis — subsection 5(3). The de minimis rule does not apply to the following categories of goods, as specified in section 5(3) of the Uniform Regulations and USMCA Annex 4-A:

• Dairy products — a non-originating material of Chapter 4 (Dairy Produce) that is used in the production of a good of Chapter 4.
• Edible preparations containing more than 10 percent by weight of milk solids — a non-originating material of heading 19.01 through 19.05 that is used in the production of a good of heading 19.01 through 19.05.
• Citrus fruit and juices — a non-originating material of Chapter 20 (Preparations of Vegetables, Fruit, Nuts or Other Parts of Plants) that is used in the production of a good of subheading 2009.11 through 2009.39 (fruit and vegetable juices).
• Instant coffee — a non-originating material of heading 21.01 (Extracts, Essences and Concentrates of Coffee) that is used in the production of a good of heading 21.01.
• Chemicals, plastics, rubber — a non-originating material of Chapter 28 through 40 (with exceptions for heading 28.05, 28.43, 28.48, Chapter 31 fertilizers, and certain other headings) that is used in the production of a good of the same chapter or heading, unless the non-originating material is of a different subheading than the good. This subheading-level exception reflects the high degree of transformation required for chemical and polymer products.
• Textiles and apparel — a non-originating material of Chapter 50 through 63 that is used in the production of a good of Chapter 50 through 63.

For these excluded categories, even a small quantity of non-originating materials that fail the tariff-shift test will disqualify the good from preferential treatment, and the importer may not invoke the de minimis rule to overlook the failure.

Special de minimis rule for textiles — subsection 5(6). Although textiles and apparel are excluded from the general de minimis rule in subsection 5(1), section 5(6) of the Uniform Regulations provides a separate de minimis tolerance for textile goods of Chapters 50 through 60 or heading 96.19 (linoleum, floor coverings, and other articles). A textile good containing non-originating materials that do not satisfy the applicable change in tariff classification will be considered originating in the territory of a USMCA country if the total weight of those non-originating materials is not more than 10 percent of the total weight of the good. This weight-based de minimis is measured differently from the value-based de minimis in subsection 5(1): for textile goods, the 10 percent threshold applies to the weight of non-conforming fibers, yarns, or fabrics relative to the total weight of the finished textile article. As with the general de minimis rule, if the product-specific rule also includes an RVC requirement, the value of the non-originating materials counted under the textile de minimis must still be included in the calculation of regional value content.

Valuation of non-originating materials for de minimis purposes — subsection 5(5). Under section 5(5) of the Uniform Regulations, the value of non-originating materials for purposes of subsections 5(1) (tariff-shift de minimis) and 5(4) (RVC-only de minimis) is determined in accordance with subsections 8(1) through 8(6) of the Uniform Regulations, which implement the WTO Customs Valuation Agreement. Typically, the value of a non-originating material is the transaction value of the material (the price actually paid or payable to the seller of the material, adjusted to an FOB or equivalent basis) at the time the material is acquired by the producer. If the material is self-produced, the value is the sum of all costs incurred in the production of the material, plus a reasonable amount for general expenses and profit. The producer must maintain records demonstrating the value of non-originating materials for a minimum of five years under 19 C.F.R. § 182.13.

Application in practice — worked examples in the Uniform Regulations. The Uniform Regulations in section 5(15) include worked examples illustrating the de minimis rules. In Example 1, a producer in a USMCA country uses originating and non-originating materials to produce aluminum powder of heading 76.03. The product-specific rule for heading 76.03 in Annex 4-B, Schedule I, requires a change in tariff classification from any other chapter. If all non-originating materials are from Chapter 76 (and thus fail the chapter-change test), but the value of the non-originating Chapter 76 materials does not exceed 10 percent of the transaction value of the finished aluminum powder, the powder qualifies as originating under the de minimis rule in subsection 5(1), provided there is no RVC requirement in the product-specific rule or, if there is, the non-originating materials are counted in VNM.

Interaction with other rules — only originating materials are exempt from tariff-shift tests. The de minimis rule must be read in conjunction with General Interpretative Note (d) of Schedule I to the Uniform Regulations, which provides that a change in tariff classification specified in a product-specific rule of origin applies only to non-originating materials. Originating materials may remain in the same tariff classification as the finished good without violating the tariff-shift requirement. The de minimis rule, by contrast, applies only when non-originating materials fail the prescribed tariff shift but their aggregate value is below the 10 percent threshold. The practical consequence is that a producer should first segregate originating and non-originating materials; apply the tariff-shift test only to the non-originating materials; and, if any non-originating materials fail the test, determine whether their aggregate value falls within the 10 percent de minimis allowance.

Verification and compliance. Under USMCA Chapter 5 and 19 C.F.R. Part 182, Subpart G, U.S. Customs and Border Protection may verify whether a good satisfies the de minimis rule by requesting documentation of the value and tariff classification of all non-originating materials used in production, the transaction value or total cost of the good, and the calculation demonstrating that the non-conforming materials do not exceed the 10 percent threshold. If CBP determines that the de minimis rule was incorrectly applied—for example, the value of non-originating materials that failed the tariff shift exceeded 10 percent, or the good was in an excluded category under subsection 5(3)—preferential tariff treatment will be denied and duty will be assessed at the most-favored-nation (MFN) rate or, if applicable, an additional-duty rate imposed under Section 301, Section 232, or other authority, plus interest under 19 U.S.C. § 1505(d). Misstatements regarding the application of the de minimis rule may also trigger civil penalties under 19 U.S.C. § 1592.

Source: USMCA Chapter 4 — Rules of Origin, Article 4.12 (De Minimis) Source: 19 C.F.R. Part 182, Appendix A — Rules of Origin Regulations (USMCA Uniform Regulations), Section 5 (De Minimis) Source: 19 C.F.R. § 182.13 — Maintenance of records

As of June 2026, the United States has comprehensive free trade agreements (FTAs) in force with 20 countries across six continents, each granting reduced or zero tariff rates for "originating" goods that satisfy the product-specific rules of origin codified in the applicable FTA chapter and implementing regulations. In addition to the United States–Mexico–Canada Agreement (USMCA), which entered into force on July 1, 2020 and replaced NAFTA, the United States maintains 14 additional bilateral and regional FTAs that provide preferential tariff treatment for goods imported from FTA partner countries. An importer claiming preferential duty treatment under any of these agreements must determine whether the good qualifies as "originating" under the applicable FTA's rules of origin, maintain a certification or declaration of origin (except for certain low-value shipments), and demonstrate compliance with direct-shipment and other procedural requirements.

The 20-country FTA network. The operational U.S. free trade agreements cover the following countries and regions, listed in chronological order of entry into force:

• Israel — United States-Israel Free Trade Agreement (ILFTA), entered into force in 1985; the first U.S. FTA. Codified in General Note 8 of the Harmonized Tariff Schedule of the United States (HTSUS) and implemented in 19 U.S.C. § 2112. The ILFTA provides for free or reduced rates of duty for merchandise imported from Israel, subject to the origin requirements in General Note 8(b).

• Canada and Mexico — United States–Mexico–Canada Agreement (USMCA), entered into force on July 1, 2020, replacing the North American Free Trade Agreement (NAFTA), which terminated on June 30, 2020. Codified in General Note 11, HTSUS, and implemented in 19 U.S.C. §§ 4501–4732 and 19 C.F.R. Part 182.

• Jordan — United States-Jordan Free Trade Agreement (US-JFTA), signed October 24, 2000, and entered into force December 17, 2001. Codified in General Note 18, HTSUS, and implemented in 19 U.S.C. § 2112 note and 19 C.F.R. Part 10, Subpart K (§§ 10.701–10.712).

• Chile — United States-Chile Free Trade Agreement (US-CFTA), entered into force January 1, 2004. Codified in General Note 26, HTSUS, and implemented in 19 U.S.C. § 3805 note (Pub. L. 108-77, 117 Stat. 909) and 19 C.F.R. Part 10, Subpart H (§§ 10.401–10.480).

• Singapore — United States-Singapore Free Trade Agreement (SFTA), entered into force January 1, 2004. Codified in General Note 25, HTSUS, and implemented in 19 U.S.C. § 3805 note (Pub. L. 108-78, 117 Stat. 948) and 19 C.F.R. Part 10, Subpart I (§§ 10.501–10.570).

• Australia — United States-Australia Free Trade Agreement (AFTA or AUFTA), entered into force January 1, 2005. Codified in General Note 28, HTSUS, and implemented in 19 U.S.C. § 3805 note (Pub. L. 108-286, 118 Stat. 919) and 19 C.F.R. Part 10, Subpart L (§§ 10.701–10.780).

• Morocco — United States-Morocco Free Trade Agreement (MFTA), entered into force January 1, 2006. Codified in General Note 27, HTSUS, and implemented in 19 U.S.C. § 3805 note (Pub. L. 108-302, 118 Stat. 1103) and 19 C.F.R. Part 10, Subpart M (§§ 10.761–10.799).

• Bahrain — United States-Bahrain Free Trade Agreement (BFTA), entered into force August 1, 2006. Codified in General Note 30, HTSUS, and implemented in 19 U.S.C. § 3805 note (Pub. L. 109-169, 119 Stat. 3581) and 19 C.F.R. Part 10, Subpart N (§§ 10.801–10.839).

• Central America and Dominican Republic — Dominican Republic–Central America–United States Free Trade Agreement (CAFTA–DR), signed August 5, 2004, and entered into force on a rolling basis beginning in 2006. The CAFTA–DR parties are El Salvador (March 1, 2006), Honduras (April 1, 2006), Nicaragua (April 1, 2006), Guatemala (July 1, 2006), the Dominican Republic (March 1, 2007), and Costa Rica (January 1, 2009). Codified in General Note 29, HTSUS, and implemented in 19 U.S.C. § 4001 et seq. (Pub. L. 109-53, 119 Stat. 462) and 19 C.F.R. Part 10, Subpart J (§§ 10.581–10.620).

• Oman — United States-Oman Free Trade Agreement (OFTA), entered into force January 1, 2009. Codified in General Note 31, HTSUS, and implemented in 19 U.S.C. § 3805 note (Pub. L. 109-283, 120 Stat. 1191) and 19 C.F.R. Part 10, Subpart P (§§ 10.861–10.899).

• Peru — United States-Peru Trade Promotion Agreement (PTPA), entered into force February 1, 2009. Codified in General Note 32, HTSUS, and implemented in 19 U.S.C. § 3805 note (Pub. L. 110-138, 121 Stat. 1455) and 19 C.F.R. Part 10, Subpart Q (§§ 10.901–10.939).

• Korea — United States-Korea Free Trade Agreement (KORUS or UKFTA), signed June 30, 2007, and entered into force March 15, 2012. Codified in General Note 33, HTSUS, and implemented in 19 U.S.C. § 3805 note (Pub. L. 112-41, 125 Stat. 428) and 19 C.F.R. Part 10, Subpart R (§§ 10.1001–10.1057).

• Colombia — United States-Colombia Trade Promotion Agreement (CTPA), entered into force May 15, 2012. Codified in General Note 34, HTSUS, and implemented in 19 U.S.C. § 3805 note (Pub. L. 112-42, 125 Stat. 462) and 19 C.F.R. Part 10, Subpart S (§§ 10.3001–10.3069).

• Panama — United States-Panama Trade Promotion Agreement (Panama TPA), entered into force October 31, 2012. Codified in General Note 35, HTSUS, and implemented in 19 U.S.C. § 3805 note (Pub. L. 112-43, 125 Stat. 497) and 19 C.F.R. Part 10, Subpart T (§§ 10.2001–10.2069).

Common structural elements — tariff shift, regional value content, and wholly obtained. Although each FTA contains its own product-specific rules of origin, the modern post-2000 U.S. FTAs (Chile, Singapore, Australia, Morocco, Bahrain, Oman, Peru, Korea, Colombia, Panama, and CAFTA–DR) share a common structural framework derived from the WTO Customs Valuation Agreement and built on three principal qualifying criteria:

1. Wholly obtained or produced — A good that is entirely the growth, product, or manufacture of one or both FTA parties qualifies as originating without reference to a tariff-shift or regional-value-content test. Wholly obtained goods include minerals extracted, live animals born and raised, plants harvested, fish caught in territorial waters or the exclusive economic zone, and goods produced entirely from originating materials.

1. Tariff-shift rule — A good containing non-originating (non-party) materials qualifies as originating if each non-originating material undergoes the applicable change in tariff classification set forth in the product-specific rule of origin in the FTA's rules-of-origin annex. Typical formulations include a change to the heading or subheading from any other chapter, heading, or subheading, often combined with exceptions or regional-value-content requirements.

1. Regional value content (RVC) — Many product-specific rules require that the good meet a minimum percentage of regional value content, calculated under methods analogous to those in USMCA Article 4.5: a build-down method based on the transaction value of the good minus the value of non-originating materials, or a build-up method based on the value of originating materials and direct costs of processing. Threshold percentages vary by FTA and product; common RVC thresholds in non-USMCA FTAs range from 35 percent to 50 percent, depending on the calculation method and the product category.

Certification and documentation requirements. Unlike NAFTA, which required a uniform Certificate of Origin on CBP Form 434, and unlike USMCA, which permits a flexible certification completed by the importer, exporter, or producer, most U.S. FTAs require a certification or declaration prepared by the importer, exporter, or producer and submitted to U.S. Customs and Border Protection upon request. The certifications are typically free-form documents that must include prescribed data elements such as a description of the good, the applicable tariff classification, the origin criterion, the name and contact information of the certifier, and a statement that the good complies with the FTA's origin requirements. The regulations implementing each FTA specify the required elements:

• For the Chile, Singapore, Australia, Korea, Colombia, and Panama FTAs, the importer, exporter, or producer must complete a certification in substantially the form prescribed in the implementing regulation (19 C.F.R. §§ 10.411, 10.523, 10.723, 10.1023, 10.3023, and 10.2023, respectively). The certification may be applicable to a single importation or to multiple importations of identical goods within a blanket period not exceeding 12 months.

• For the Morocco, Bahrain, Oman, and Peru FTAs, the importer must submit a declaration in substantially the form prescribed in the implementing regulation, including a detailed description of the origin and value of any foreign (non-originating) materials used in the good that have not been substantially transformed or have not undergone the applicable tariff-classification change (19 C.F.R. §§ 10.773, 10.813, 10.873, and 10.913, respectively).

• For CAFTA–DR, the importer must complete a certification in accordance with 19 C.F.R. § 10.593, including the legal name, address, telephone, and e-mail of the importer, exporter, and producer (or a statement that the information is available upon request), and a description of the origin criterion.

• For Jordan, the importer must submit a declaration in accordance with 19 C.F.R. § 10.704, certifying that the goods comply with the origin requirements specified in the US-JFTA.

Low-value exemptions. Most U.S. FTAs exempt low-value shipments from the certification or declaration requirement, provided the importer makes a written statement that the good qualifies as originating. The threshold varies by agreement but is commonly USD 2,500 or less. Certain high-risk goods (such as textiles, alcoholic beverages, and tobacco products) are excluded from the low-value exemption.

De minimis rules. Many FTAs include a de minimis tolerance permitting a good containing a small percentage of non-originating materials that fail the tariff-shift test to qualify as originating if the value of those materials does not exceed a specified threshold (commonly 10 percent of the transaction value or total cost of the good). The de minimis rule typically does not apply to textile and apparel goods, dairy products, or certain chemical products. The structure is analogous to USMCA Article 4.12 and section 5 of the USMCA Uniform Regulations, but the excluded categories and threshold percentages vary by agreement.

Recordkeeping and verification. Under all U.S. FTAs, the importer claiming preferential tariff treatment must maintain the certification or declaration and all supporting records for a minimum of five years from the date of importation, in accordance with 19 U.S.C. § 1508 and the recordkeeping regulations in each FTA's implementing subpart. CBP may verify a claim for preferential treatment by written questionnaire, request for information, or visit to the premises of the exporter or producer. If the importer cannot substantiate the origin claim, CBP will deny preferential treatment, assess duty at the most-favored-nation (MFN) or column 1 general rate (or, if applicable, an additional duty under Section 301, Section 232, or other authority), and may assess interest and penalties under 19 U.S.C. §§ 1505(d) and 1592.

Where to find the product-specific rules. The product-specific rules of origin for each FTA are codified in the relevant General Note to the Harmonized Tariff Schedule of the United States. The General Notes are published by the U.S. International Trade Commission and are incorporated into the electronic HTSUS available at hts.usitc.gov. Each General Note includes the product-specific rules organized by HTS heading or subheading, plus interpretative notes and definitions. The implementing regulations for each FTA are codified in 19 C.F.R. Part 10, with each FTA assigned a separate subpart (e.g., Subpart H for Chile, Subpart R for Korea, Subpart J for CAFTA–DR). CBP has also published a side-by-side comparison chart of FTA and preferential trade legislation programs to assist importers in comparing documentation, origin-rule citations, and procedural requirements across multiple agreements.

Critical difference from USMCA: exporter or producer certification typically required. Unlike USMCA, which permits the importer to complete the certification of origin on the basis of reasonable reliance or the importer's own knowledge of the facts, many of the earlier U.S. FTAs (particularly Chile, Singapore, Australia, Morocco, Bahrain, Oman, Peru, Korea, Colombia, and Panama) contemplate that the exporter or producer will prepare the certification and provide it to the importer, and that the importer will rely on that certification when claiming preferential treatment. The importer is still primarily responsible for the accuracy of the entry under the reasonable-care standard established by the Customs Modernization Act (Title VI of Pub. L. 103-182), but the certification process is typically producer- or exporter-driven, not importer-driven, for these FTAs. An importer uncertain whether a good qualifies as originating under a particular FTA should request a written certification from the exporter or producer, or request a binding advance ruling from CBP's Office of Regulations and Rulings under 19 C.F.R. Part 177.

Interaction with Section 301, Section 232, and other additional duties. Goods that qualify for preferential tariff treatment under a U.S. FTA are generally exempt from most-favored-nation (column 1 general) duty rates and pay the lower FTA duty rate (often zero) instead. However, FTA preferential treatment does not automatically exempt a good from additional tariffs imposed under Section 301 of the Trade Act of 1974, Section 232 of the Trade Expansion Act of 1962, or the International Emergency Economic Powers Act (IEEPA), unless the proclamation or Federal Register notice imposing the additional tariff expressly excludes goods receiving FTA preferential treatment. As of March 2025, certain goods imported from Korea, for example, remain subject to Section 232 steel and aluminum tariffs even when they qualify for KORUS preferential treatment, because the Section 232 proclamations do not provide an FTA-origin exemption. Importers must review the specific additional-duty proclamation to determine whether FTA-originating goods are exempt.

Source: Office of the United States Trade Representative — Free Trade Agreements Source: 19 C.F.R. Part 10, Subpart H — United States-Chile Free Trade Agreement Source: 19 C.F.R. Part 10, Subpart I — United States-Singapore Free Trade Agreement Source: 19 C.F.R. Part 10, Subpart K — United States-Jordan Free Trade Agreement Source: 19 C.F.R. Part 10, Subpart L — United States-Australia Free Trade Agreement Source: 19 C.F.R. Part 10, Subpart M — United States-Morocco Free Trade Agreement Source: 19 C.F.R. Part 10, Subpart N — United States-Bahrain Free Trade Agreement Source: 19 C.F.R. Part 10, Subpart P — United States-Oman Free Trade Agreement Source: 19 C.F.R. Part 10, Subpart R — United States-Korea Free Trade Agreement

A party involved in the importation or potential importation of merchandise into the United States may obtain a binding country-of-origin ruling from U.S. Customs and Border Protection (CBP) pursuant to 19 C.F.R. Part 177. This ruling provides an authoritative determination for a specific transaction—critically, whether a good meets the origin requirements for marking, duty rate, or free trade agreement (FTA) purposes—before formal entry, and binds CBP to the stated facts and classification for that merchandise.

Who may request a ruling and how to file. Per 19 C.F.R. § 177.1(a), any person who is an importer, exporter, or other party with a direct and demonstrable interest in the question may submit a request. The request must describe an actual or prospective U.S. import transaction. Ruling requests are made in writing, addressed to: Office of Trade, Regulations and Rulings, Commercial and Trade Facilitation Division, or may be submitted electronically via CBP's eRulings system.

Required information. The request must include all relevant facts about the transaction, including a full and accurate description of the goods, their composition, tariff classification, the origin of each component, and manufacturing details. Per § 177.2(b), the party must "state in detail all relevant facts" and may need to submit samples, drawings, or other supporting documents if requested by CBP. The request should specify the origin rules at issue, such as those applicable under USMCA or another listed FTA if preferential treatment is sought.

Scope and effect. Under § 177.9, a CBP origin ruling is binding on both CBP and the requesting party for the described transaction(s) as long as material facts and applicable law remain unchanged. The ruling remains effective unless modified or revoked under § 177.10, at which point notice is published in the Customs Bulletin. CBP issues rulings "expeditiously" but does not guarantee a decision by any deadline (§ 177.9(b)). A party disagreeing with a ruling may pursue further administrative review or judicial appeal under other provisions of customs law.

Public access and limits. All binding rulings are published, with confidential data redacted, in CBP’s CROSS database (https://rulings.cbp.gov/) for public reference. CBP will generally decline to issue a ruling on incomplete requests, hypothetical scenarios, or matters already before another government agency or the courts (§ 177.7).

A binding ruling under Part 177 secures official advance treatment for the origin of merchandise in a specific import context, and adherence to its terms is a cornerstone of entry compliance for U.S. imports subject to origin requirements.

Source: 19 C.F.R. Part 177 — Administrative Rulings Source: CBP eRulings and CROSS database

The controlling rule for determining country of origin for most goods imported into the United States—outside the scope of free trade agreements or Part 102-specific marking/tariff shift—is the “substantial transformation” test. This standard governs non-preferential origin determinations for goods originating in countries without a U.S. FTA, such as China, the EU, Japan, or Vietnam, and for the application of most-favored-nation (MFN) tariff rates, AD/CVD cases, Section 301 duties, and marking under 19 U.S.C. § 1304.

Definition and regulatory basis. Under 19 C.F.R. § 134.1(b), a good is a “product of” a country if it is “wholly the growth, product, or manufacture of that country,” or if it is “substantially transformed” there into a new and different article of commerce, having a name, character, or use distinct from those of its constituent materials. The test traces to judicial authority—most notably the U.S. Supreme Court in Anheuser-Busch Brewing Ass’n v. United States, 207 U.S. 556 (1908)—and has been refined by the CIT and Federal Circuit. Treasury Decision (T.D.) 85–38 and subsequent CBP rulings have elaborated specific criteria and fact patterns, establishing that the analysis is highly fact-dependent.

Key judicial interpretation. The test is grounded in whether a "new and different article of commerce" emerges from manufacturing or processing in a country. The Federal Circuit in Ferrostaal Metals Corp. v. United States, 11 F.3d 1090 (Fed. Cir. 1993), confirmed that “substantial transformation occurs when an article emerges from a manufacturing process with a name, character, and use which differ from those of the original material subjected to the process.” The CIT and CAFC have reiterated this multi-prong analysis in cases involving assembly, mixing, packaging, or simple processing—holding that minor operations, even if essential, may fall short.

For example, in Uniroyal, Inc. v. United States, 3 CIT 220 (1982), the court found that attaching imported shoe uppers to U.S. soles did not substantially transform the uppers. By contrast, in National Juice Products Ass’n v. United States, 10 CIT 48 (1986), blending multiple juices created a new product (retail orange juice) with substantially transformed character and use.

Agency guidance and rulings. CBP advisories (e.g., Article No. 1183, Nov. 4, 2025) reaffirm that substantial transformation requires a “fundamental change” in form, appearance, nature, or character, significant compared to the value of the incoming materials (https://www.help.cbp.gov/s/article/Article-1183). CBP’s CROSS database continues to emphasize a fact-based, “identity-lost” analysis: origin attaches where the operation imparts new identity—basic assembly or repackaging typically will not.

Operational risks and documentation. Importers must apply the substantial transformation standard with reasonable care and retain documentation. In close cases, a binding ruling under 19 C.F.R. Part 177 is advisable.

Source: 19 C.F.R. § 134.1 — Country of origin definitions Source: T.D. 85–38 (link not available) Source: CBP Article No. 1183 (Nov. 4, 2025)

Note: The T.D. 85–38 link is broken as of June 2026. Citation retained for accuracy; no live official URL could be located. The underlying legal standard remains unchanged since the last update.

Under the United States–Mexico–Canada Agreement (USMCA), two advanced concepts—accumulation and intermediate material designation—allow manufacturers and importers to maximize North American content for preferential origin. These tools can determine whether a good qualifies as “originating” under tariff-shift and regional value content (RVC) requirements in Chapter 4 of the USMCA and the Uniform Regulations (Appendix A to 19 C.F.R. Part 182, sections 11 and 12).

Accumulation (Section 11, Uniform Regulations; Article 4.3, USMCA) Accumulation permits producers in the US, Mexico, and Canada to treat value added and origin-conferring activities performed by other USMCA parties as if conducted in their own country. Practically, this means the value of originating materials and direct processing in any of the three countries can be pooled to meet a good’s origin requirements. In an RVC calculation, any value added by a USMCA supplier—whether the supplier is in the same country or another USMCA party—is counted as “originating” when determining whether the good meets the minimum threshold. Accumulation does not convert non-originating materials into originating—only the value added or transformation steps occurring in North America can be pooled.

Example: If a US producer sources a component from a Mexican supplier, and that supplier’s processing confers origin under the USMCA, both the supplier’s and producer’s regional value content may be accumulated in the final RVC calculation for goods exported to Canada.

Intermediate Material Designation (Section 12, Uniform Regulations) A producer may elect to designate a self-produced, originating material as an “intermediate material.” This allows the producer to count the full value of the intermediate in the RVC of the finished good, rather than allocating value across multiple components. The process requires that the intermediate material itself must satisfy the applicable rule of origin (tariff-shift and/or RVC) independently, as if it were exported separately. If it qualifies, then when the producer uses it in the manufacture of another good, its value is treated as wholly originating in the subsequent product’s origin calculation. This is particularly useful for vertically integrated manufacturers producing subcomponents for use in final goods.

Limitations: Designation is at the producer’s option, but the intermediate material must fully satisfy the origin requirements on its own, and proper records must be retained to demonstrate qualification. Both tools are applied at the producer’s request, and all calculations must be documented in case of verification by CBP, pursuant to 19 C.F.R. § 182.13.

Source: 19 C.F.R. Part 182, Appendix A — USMCA Uniform Regulations, Sections 11–12 Source: USMCA Chapter 4 — Rules of Origin, Article 4.3

The United States extends unilateral duty-free treatment to goods from developing countries under several preference programs, principally the Generalized System of Preferences (GSP, 19 U.S.C. §§ 2461–2467), the African Growth and Opportunity Act (AGOA, 19 U.S.C. §§ 3701–3737), and (until its lapse) the Andean Trade Promotion and Drug Eradication Act (ATPDEA, formerly 19 U.S.C. §§ 3201–3206). Each program imposes distinct origin and value content requirements that diverge from those found in free trade agreements.

GSP rules of origin. Under 19 C.F.R. §§ 10.171–178, a good qualifies for GSP if it is either: (1) wholly the growth, product, or manufacture of a beneficiary country; or (2) has been substantially transformed there into a new and different article of commerce. The “substantial transformation” standard closely mirrors the U.S. non-preferential rule. In addition, at least 35% of the appraised value at importation must be attributed to the direct cost or value of materials produced and/or direct processing performed in one or more GSP beneficiary countries (including, if applicable, the U.S.). Inputs from multiple beneficiary countries may be aggregated under the “cumulation” rule, but only if each is eligible under the GSP program; inputs from non-beneficiary countries cannot be counted. Goods must be imported directly from the beneficiary country (direct shipment required); exceptions for transshipment are set out at 19 C.F.R. § 10.175. Entry procedures generally require a U.S. importer to submit a written declaration that the goods meet GSP terms.

AGOA rules of origin. AGOA incorporates the GSP tests for most goods (including the 35% value rule), but layers additional eligibility and origin rules—especially for textiles/apparel—via 19 C.F.R. §§ 10.211–10.217. For non-textile items, the GSP origin/value content structure applies. For textiles and apparel, AGOA allows various product-specific regimes: for example, items may qualify if assembled in an eligible sub-Saharan country from “fabric wholly formed and cut in the U.S.” or “knit-to-shape components in an eligible country,” but 19 C.F.R. § 10.214 specifies multiple qualifying tracks (including wholly originating, regional value content, or transformation from specified fibers/yarns/fabrics), with special rules for lesser-developed countries and certain time-limited designations. Practitioners should consult § 10.214 directly for full details.

Recent update (May 2026): AGOA was reauthorized and the U.S. tariff schedule amended as of May 2026, with Gabon restored as a beneficiary country. CBP announced that as of February 6, 2026, importers could resume using SPI “D” for AGOA entries, and as of February 9, 2026, quotas for AGOA-eligible goods reopened. Origin/value content tests remain unchanged; the update primarily affected country/commodity eligibility and quota administration. The May 2026 Proclamation is available at the Federal Register site listed below.

ATPDEA. ATPDEA expired as of July 31, 2013; its origin and value content rules (in 19 C.F.R. §§ 10.201–10.207) formerly paralleled key aspects of GSP (35% value rule, direct shipment, eligible-country transformation), but included distinct special regimes for specific products (including certain textiles and apparel). The regulatory sections remain on the books for any outstanding claims from the covered period; new claims are not eligible post-lapse.

Operational requirements and compliance. Importers must maintain records substantiating eligibility for no less than five years (19 C.F.R. § 163.4) and furnish all origin- and value-related documentation upon CBP request. False or erroneous origin claims may result in repayment of duties plus penalties under 19 U.S.C. § 1592 (with penalty amounts detailed in that section). As of June 2026, GSP remains expired and is pending Congressional renewal; if renewed, benefits may apply retroactively to entries since the last expiration, subject to published procedures.

Source: 19 C.F.R. § 10.171–178 — GSP regulations Source: 19 C.F.R. § 10.211–10.217 — AGOA regulations Source: 19 C.F.R. § 10.201–10.207 — ATPDEA regulations Source: 19 C.F.R. § 163.4 — Recordkeeping Source: Proclamation 10792—To Take Certain Actions Under the African Growth and Opportunity Act and for Other Purposes (May 2026) Source: CBP AGOA Information Page (as of June 2026)

To claim preferential tariff treatment under any U.S. free trade agreement (FTA) or unilateral preference program—such as the Generalized System of Preferences (GSP) or African Growth and Opportunity Act (AGOA)—the imported good must be shipped directly from the country of export (the FTA partner or beneficiary country) to the United States. This "direct shipment" or "no further processing" requirement is a recurring compliance pitfall.

USMCA and most FTAs — the direct shipment rule. Under the United States–Mexico–Canada Agreement (USMCA), Article 4.17, incorporated in 19 C.F.R. § 182.16, provides that a good retains originating status only if it is transported directly from a USMCA country to the territory of another, or, if shipped through a non-party, remains under customs control and does not enter commerce or undergo further processing. Shipments that are split or temporarily stored in a third country must stay under customs supervision and avoid further production or operations "other than unloading, reloading, or operations necessary to preserve the good in good condition." If the goods enter commerce or are subject to processing outside the territories of the USMCA, originating status is forfeited. U.S. FTAs with Chile, Korea, Australia, and others contain similar direct shipment/transit requirements; see, e.g., 19 C.F.R. § 10.542 (Korea) and 19 C.F.R. § 10.420 (Chile).

GSP, AGOA, and preference programs. For goods seeking GSP or AGOA benefits, the direct shipment requirement is codified in 19 C.F.R. § 10.175. Goods must "be imported directly" from the beneficiary country, but can pass through third countries provided no operations occur there other than loading, unloading, or activities necessary to preserve the goods. Goods may remain under customs bond or in a bonded warehouse during transit. Importers must furnish documentary proof (e.g., through bills of lading or customs certificates) if requested by CBP to establish that the shipment met direct shipment conditions.

Operational risks and documentation. Failure to demonstrate direct shipment or lack of third-country processing will result in denial of preferential duty status, even if the good otherwise meets all origin and value-content criteria. Practitioners must maintain transport documents, customs control records, and (if applicable) storage or transshipment certificates for at least five years.

Source: USMCA 19 C.F.R. § 182.16 — Transit and transshipment Source: 19 C.F.R. § 10.175 — GSP direct shipment Source: 19 C.F.R. § 10.542 — Korea FTA direct shipment Source: 19 C.F.R. § 10.420 — Chile FTA direct shipment

The United States–Mexico–Canada Agreement (USMCA) imposes a specific "Labor Value Content" (LVC) requirement on passenger vehicles, light trucks, and selected auto parts classified under the Automotive Appendix to Annex 4-B—an extra hurdle on top of core regional value content (RVC), tariff-shift, and steel/aluminum origin rules. The LVC is a minimum percentage of the vehicle's value that must be accounted for by assembly, manufacturing, or high-value R&D performed by production workers making at least US$16 per hour (indexed for inflation and exchange rates; consult USTR notices for current thresholds).

Scope and application: The LVC obligation applies to passenger vehicles (HS 8703), light trucks (various subheadings including HS 8704.21, 8704.31, 8704.32, 8704.50, and others as defined in Table A1 of the Automotive Appendix), and core auto parts. A vehicle cannot qualify as originating—and cannot receive USMCA preferential tariff treatment—unless it also meets applicable LVC benchmarks, even if it satisfies RVC and tariff-shift rules (Automotive Appendix, Sec. 2 and 7).

Wage thresholds and calculation: At least 40% (for passenger vehicles) or 45% (for light trucks) of the ex-works price must be derived from: (a) materials/manufacturing at plants where production workers earn at least $16/hr; (b) North American high-wage technology R&D or digital assembly (e.g., design and engineering, advanced data analytics, cybersecurity, or software work, as itemized in Uniform Regulations Sec. 7(8)); or (c) North American high-wage engine, transmission, or battery manufacturing. For a part to qualify, similar rules apply to specific “core parts” as detailed in Table A1. Automakers must allocate labor expenditures carefully and maintain records to document compliance.

Phase-in schedule (2020–2023 and beyond): For passenger vehicles, the threshold was 30% from July 1, 2020 to June 30, 2021; 33% for the next year; 36% in year three; and 40% from July 1, 2023 onward. For light trucks, the schedule steps up from 32%, to 35%, then 38%, and finally 45% (from July 1, 2023 onward). Vehicles qualified under an "alternative staging regime" (ASR) approved by the parties may follow a tailored phase-in published by USTR and its partners; these are typically granted to manufacturers unable to meet LVC benchmarks at entry into force.

Compliance and documentation: To claim LVC-based origin, OEMs must submit a certification with each customs entry and maintain all supporting wage, facility, and category records for at least five years (Uniform Regulations, Sec. 7(16); 19 C.F.R. § 182.12). CBP verification authority is robust—failure to meet LVC disqualifies the vehicle’s (or part’s) USMCA origin status, even if RVC/tariff-shift are satisfied, and importers may be liable for regular duties, interest, and even penalties under 19 U.S.C. § 1592.

Primary sources: See USMCA Automotive Appendix Art. 7 and the Uniform Regulations (Appendix A to 19 C.F.R. Part 182), especially Section 7, for full definitions, category breakdowns, wage formulas, and recordkeeping. Annual wage thresholds and ASR notifications are in USTR notices.

Source: USMCA Automotive Appendix, Article 7 — Labor Value Content Source: 19 C.F.R. Part 182, Appendix A — Uniform Regulations, Section 7 (LVC)

USMCA’s Automotive Appendix to Annex 4-B imposes strict requirements on the sourcing of steel and aluminum for passenger vehicles, light trucks, and certain auto parts in order for those goods to qualify as originating. This requirement operates separately from the standard Regional Value Content (RVC), Labor Value Content (LVC), and tariff-shift origin rules. Under Article 7 of the Automotive Appendix and the Uniform Regulations (19 C.F.R. Part 182, Appendix A, Section 8), automotive producers must certify that at least 70% of both steel and aluminum purchases by value (during the producer’s fiscal year) are sourced from North America (United States, Mexico, or Canada).

Steel requirement. For a vehicle or qualifying auto part to be originating, at least 70% of the vehicle producer’s purchases of steel (by value) must be from North American producers, calculated on a fiscal-year basis. Critically, for steel, only “melted and poured” steel—defined as steel that is both melted and poured in North America—will count toward this threshold beginning July 1, 2027 (not 2023 as previously indicated). Until that date, certain semifinished steel processed in North America may be included, but after July 1, 2027, only steel processed from the initial melt and mix through to final coating in North America will qualify. This change was confirmed by Section 17 of the Uniform Regulations (as amended in the final USMCA implementation rule).

Aluminum requirement. The aluminum sourcing threshold is parallel: at least 70% of a vehicle producer’s purchases (by value) must be North American-origin aluminum, calculated on the same fiscal-year basis. As of June 2026, there is no “melted and poured” or analogous primary manufacturing rule for aluminum—purchases from smelters and fabricators in the United States, Mexico, or Canada suffice, so long as other USMCA origin requirements are met.

Certification and recordkeeping. The producer must maintain and provide to CBP, upon request, detailed records of steel and aluminum purchases, including supplier certifications establishing North American origin. The required recordkeeping period is five years (19 C.F.R. § 182.13; Uniform Regulations, Section 8). Failure to substantiate origin for these purchases will invalidate the vehicle’s or part’s preferential status, subjecting the importer to regular duties, interest, and penalties under 19 U.S.C. § 1592.

Operational compliance. Manufacturers generally collect supplier origin certificates with each shipment, aggregate this data internally, and monitor both the percentage and process-source requirements across their supply chains for each fiscal year. CBP may demand all supporting documentation during or after entry review. Goods that fail these steel or aluminum requirements lose their originating status even if RVC, LVC, and tariff-shift tests are met, making this a key compliance and audit risk for automotive importers in 2025–2027 and beyond.

Source: 19 C.F.R. Part 182, Appendix A — USMCA Uniform Regulations, Section 8 & Section 17 Source: 19 C.F.R. § 182.13 — Recordkeeping requirements

Claiming preferential tariff treatment under a U.S. free trade agreement (FTA) or unilateral preference program obligates the importer, exporter, or producer to demonstrate the good qualifies as "originating" if Customs and Border Protection (CBP) requests verification. CBP's authority to verify claims and audit compliance is robust—and missteps carry significant penalty exposure.

Initiation and authority. CBP verifies origin claims under multiple authorities, notably USMCA Chapter 5 (19 C.F.R. Part 182 Subpart G), and parallel provisions in 19 C.F.R. Part 10 for older FTAs and unilateral programs (e.g., §182.211 for USMCA, §10.61-10.199 for various FTAs). A verification may be triggered by a random review, risk-based targeting, intelligence tips, or post-importation review (e.g., focused assessment or audit following entry summary review under 19 U.S.C. § 1509).

Verification process and requests. CBP may request verification via written questionnaires, phone/email information requests, Requests for Information (CBP Form 28), Notices of Action (CBP Form 29), or—under USMCA and certain FTAs—site visits to production facilities in FTA partner countries (per USMCA Articles 5.9–5.11; 19 C.F.R. § 182.22). When verifying an origin claim, CBP will typically require:

• The certification or declaration of origin;
• Bills of materials, production records, purchase and cost records for originating and non-originating materials;
• Evidence of regional value content (if applicable), including calculation worksheets and supporting documents;
• Records related to the direct shipment and, for automotive claims, labor value content, steel, and aluminum requirements.

Failure to timely respond (often within 30 days) or to provide sufficient records may be deemed a failure to substantiate the claim.

Outcomes, correction, and penalty consequences. If CBP determines the goods do not meet origin requirements, the claim is denied: duties are assessed at the most-favored-nation (MFN) rate (and any additional Sec. 301/232 duties), plus interest (19 U.S.C. § 1505(d)). If an importer or certifier made a false statement negligently, CBP may impose penalties under 19 U.S.C. § 1592—up to the domestic value of the merchandise for fraud, or a lesser amount for negligence/gross negligence. However, if errors are voluntarily corrected prior to a formal investigation (and tender of duties is made), the penalty may be waived (see 19 C.F.R. § 182.123; 19 C.F.R. § 162.74(g)).

Best practices. Importers and certifiers must retain all supporting records for 5 years (USMCA/FTA) or as specified by relevant program regulations (see 19 C.F.R. § 163.4). Advance rulings are encouraged where qualification is uncertain; diligent, timely production of records is critical upon CBP request. Audit risk is heightened for automotive and complex supply chains, and failure to provide English translations (if requested) can itself invalidate the claim (19 C.F.R. § 182.122).

Source: 19 C.F.R. Part 182, Subpart G — Origin Verification (USMCA and FTA) Source: 19 U.S.C. § 1509 — Customs audit authority Source: 19 U.S.C. § 1592 — Penalties for fraud, gross negligence, or negligence Source: 19 C.F.R. § 163.4 — Recordkeeping Source: 19 C.F.R. § 182.122 — Translation requirement

The "wholly obtained or produced" origin criterion is the clearest route to establishing origin under U.S. customs law and free trade agreements (FTAs). Goods that are wholly the product of a single country or FTA territory—natural resources, unprocessed agricultural goods, or simple raw materials—are conferred origin by operation of law, with no need to apply tariff shift or regional value content rules. This concept appears nearly verbatim across U.S. FTAs, Harmonized Tariff Schedule of the United States (HTSUS) General Notes, and non-preferential (most-favored-nation) origin regulations.

Exhaustive categories by authority

• HTSUS General Note 11(b)(i) (USMCA) lists the following as “wholly obtained or produced” in USMCA territory:

1. Mineral goods extracted in the territory;
2. Plants and plant products harvested there;
3. Live animals born and raised there;
4. Goods obtained from live animals raised there;
5. Goods obtained by hunting, trapping, fishing, or gathering within the territory;
6. Fish, shellfish, and other marine life taken from territorial waters or the EEZ by a party’s vessel;
7. Goods produced on factory ships registered/flagged in the territory exclusively from marine life taken as above;
8. Scrap/waste derived from manufacturing or used goods collected for recycling there;
9. Goods produced entirely from any of the above-listed goods.

• 19 C.F.R. § 102.12(b) (non-preferential origin) similarly enumerates categories, with minor textual and ordering differences (e.g., explicit reference to air/water beyond EEZ under international rights, and scrap/waste definitions).
• FTA language: USMCA (Art. 4.2(a)), KORUS, and other FTAs track this structure, with some agreements elaborating on marine and space-based extraction (e.g., “goods taken from the seabed or subsoil outside the territory, where a party has exclusive rights”, or by aircraft registered or leased by a party), as set out in their text and parallel General Notes.

Legal effect A good falling in a listed category is deemed originating, with no further origin test. However, if a product is made from both wholly obtained and other (non-originating) materials, it no longer qualifies under this criterion and must be analyzed under the relevant transformation or value-content rules. The language varies slightly by source but is functionally exhaustive—practitioners should check the specific FTA, HTSUS General Note, or 19 C.F.R. for the authoritative text and order.

Examples and practice CBP expects importers to document the full chain for “wholly obtained” claims—especially for goods at risk of substitution or fraud (e.g., marine life, minerals). Borderline or atypical cases (such as waste/scrap or marine/extractive industry goods) should be vetted using binding rulings under 19 C.F.R. Part 177. When in doubt, cite the HTSUS General Note and crosswalk to the FTA or regulatory provision in effect for that trade lane.

Source: HTSUS General Note 11 — USMCA rules of origin Source: 19 C.F.R. § 102.12 — Wholly obtained or produced Source: 19 C.F.R. Part 182, Appendix A, sec. 3(1) Source: USMCA Chapter 4, Article 4.2(a)