The US-Mexico Trade Landscape

The United States and Mexico share one of the world’s most important bilateral trade relationships, with billions of dollars in goods crossing the border daily. Understanding the legal framework governing this trade is essential for businesses operating in both countries.

USMCA Framework

Overview of USMCA

The United States-Mexico-Canada Agreement (USMCA) replaced NAFTA in 2020:

Key Features:

Duty-free trade in qualifying goods
Rules of origin requirements
Labor and environmental provisions
Digital trade provisions
Intellectual property protections
Dispute resolution mechanisms

Certificate of Origin

Required for USMCA benefits:

Requirements:

Can be completed by importer, exporter, or producer
Must contain specific data elements
Valid for one year
No signature required
Retained for 5 years

Format:

No prescribed form
Must include required information
Can be on company letterhead
Electronic versions accepted

US Import Regulations

Customs and Border Protection (CBP)

Understanding CBP requirements:

Entry Process:

Entry manifests
Evidence of right to make entry
Commercial invoice
Packing lists
Entry summary and payment

Timeframes:

Entry documents: Within 15 days of arrival
Entry summary: Within 10 days of entry
Penalties for late filing

Import Duties and Taxes

Payment obligations:

Types of Duties:

Ad valorem: Based on value
Specific: Based on weight or quantity
Compound: Combination of both

Determining Duty Rate:

Harmonized Tariff Schedule (HTS)
Country of origin
USMCA qualification
Special programs (GSP, etc.)

Customs Valuation

Determining dutiable value:

Transaction Value Method:

Price paid or payable
Plus certain additions (assists, royalties, etc.)
Less certain exclusions
Most common method

Alternative Methods:

Identical merchandise
Similar merchandise
Deductive value
Computed value
Fall-back method

Mexican Import Regulations

SAT (Servicio de Administración Tributaria)

Mexican customs authority:

Import Documentation:

Commercial invoice
Packing list
Bill of lading or airway bill
Customs pedimento (import declaration)
Certificate of origin (if claiming USMCA)

Import Permits:

Some products require permits
Prior authorization may be needed
Sector-specific regulations
Health and safety certifications

Mexican Tariffs

Understanding costs:

Tariff Structure:

General Import Tax (IGI)
Value Added Tax (IVA/VAT) – 16%
Excise taxes on specific goods
Customs processing fees

USMCA Benefits:

Duty-free for qualifying goods
Proof of origin required
Compliance with rules of origin

Rules of Origin

USMCA Rules of Origin

Determining qualification:

Product-Specific Rules:

Wholly obtained
Tariff shift
Regional value content
Specific processes

Regional Value Content:

Net cost method
Transaction value method
Minimum percentages required
Calculation methodology

Accumulation

Combining inputs:

Cumulation Provisions:

Materials from USMCA countries
Production in USMCA countries
Count toward origin qualification
Facilitates regional supply chains

Export Controls

US Export Regulations

Compliance requirements:

Export Administration Regulations (EAR):

Commerce Control List (CCL)
Export Control Classification Numbers (ECCN)
License requirements
Deemed exports

ITAR (International Traffic in Arms Regulations):

Defense articles and services
State Department jurisdiction
Strict compliance required
Significant penalties

Export Licensing

When required:

License Types:

General licenses
Special comprehensive licenses
Validated licenses
Temporary imports

Determining Need:

Item classification
Destination country
End-user
End-use

Mexican Export Regulations

Export Procedures

Requirements for exporting from Mexico:

Documentation:

Commercial invoice
Packing list
Customs pedimento
Certificate of origin
Product-specific documents

Export Tax:

Generally no export duties
Some exceptions apply
May require permits

Customs Compliance Programs

C-TPAT (Customs-Trade Partnership Against Terrorism)

US voluntary program:

Benefits:

Reduced inspections
Front of line processing
Assigned account manager
Priority consideration for new programs

Requirements:

Security assessment
Supply chain security
Regular validation
Documented procedures

Authorized Economic Operator (AEO)

Mexican program:

Advantages:

Simplified customs procedures
Reduced inspection rates
Faster processing
International recognition

Certification Process:

Application and documentation
Physical inspection
Compliance verification
Ongoing obligations

CTPAT-OEA Mutual Recognition

Benefits of alignment:

Coordinated processing
Reduced redundancy
Streamlined security
Enhanced facilitation

Industry-Specific Regulations

Food and Agriculture

Special requirements:

US (FDA and USDA):

Prior notice of food imports
Food facility registration
Food Safety Modernization Act (FSMA)
Country of origin labeling

Mexico (SENASICA and COFEPRIS):

Phytosanitary certificates
Import permits
Health registrations
Labeling requirements

Automotive

Critical sector:

USMCA Automotive Rules:

Regional value content (RVC) requirements
Labor value content (LVC) requirements
Steel and aluminum provisions
Core parts requirements

Compliance:

Detailed documentation
Supplier certifications
Annual verification
Penalties for non-compliance

Textiles and Apparel

Specific rules:

Yarn Forward Rule:

Yarn must originate in USMCA territory
Fabric must be formed in USMCA territory
Exceptions available
Short supply list

Customs Enforcement:

High scrutiny sector
Transshipment concerns
Origin verification
Penalties for violations

Transfer Pricing

Overview

Related party transactions:

Arm’s Length Principle:

Prices must be market-based
Documentation required
Transfer pricing study
Advance pricing agreements available

Customs Valuation:

Related party prices scrutinized
Test values required
Additional duties possible
Proper documentation essential

Anti-Dumping and Countervailing Duties

Understanding AD/CVD

Protection against unfair trade:

Anti-Dumping:

Sales below fair value
Material injury to US industry
Additional duties imposed
Case-by-case determination

Countervailing Duties:

Government subsidies
Unfair competitive advantage
Additional duties applied
Injury required

Compliance

If subject to orders:

Pay additional duties
Maintain detailed records
Annual administrative reviews
Potential for duty refunds

Section 301 and Other Trade Remedies

US Trade Actions

Additional duty possibilities:

Section 301 Tariffs:

Presidential authority
Respond to unfair trade practices
Country-specific measures
Exclusion process available

Section 232:

National security basis
Potential tariffs
Product-specific
Country exemptions possible

Recordkeeping Requirements

US Requirements

CBP recordkeeping:

Retention Period:

5 years from entry date
Import records
Supporting documentation
Correspondence

Electronic Records:

Acceptable if readable
Must be retrievable
Proper backup required

Mexican Requirements

SAT recordkeeping:

Retention Period:

5 years generally
Import/export documentation
Tax records
Electronic format acceptable

Penalties and Enforcement

US Penalties

Potential consequences:

Civil Penalties:

Negligence: Duty + 20 penalty
Gross negligence: Duty + 40% penalty
Fraud: Duty + 400% penalty (max)
Penalty mitigation possible

Criminal Penalties:

Intentional violations
Fines and imprisonment
Asset forfeiture
Debarment from importing

Mexican Penalties

IMSS enforcement:

Administrative Penalties:

Failure to declare
Incorrect valuation
Missing permits
Interest and surcharges

Maquiladoras

Special Program

Border manufacturing:

Benefits:

Temporary import duty deferral
VAT exemption or deferral
Simplified procedures
Export focus

Requirements:

IMMEX program registration
Compliance with rules
Inventory control
Transfer pricing compliance

Free Trade Zones

Foreign Trade Zones (US)

Special customs areas:

Advantages:

Duty deferral
Inverted tariff relief
No quotas in zone
Manufacturing possible

Strategic Trade Zones (Mexico)

Similar benefits:

Incentives:

Duty exemption
VAT exemption
Simplified procedures
Enhanced security

Conclusion

Successfully navigating US-Mexico trade regulations requires comprehensive understanding of customs laws, USMCA provisions, and ongoing compliance obligations. The regulatory environment is complex and constantly evolving, making professional guidance essential.

Whether you’re importing, exporting, or managing cross-border supply chains, proper compliance protects against penalties, facilitates smooth operations, and maximizes the benefits of the US-Mexico trade relationship. Working with experienced trade counsel ensures your business meets all legal requirements while optimizing your international operations.