Breaking Down the Borders on Cross-Border Shipping
Mexico and Canada are the first- and second-largest trade partners with the United States, totaling $614.5 billion and $612.1 billion1,2 in goods exchanged in 2019, respectively. Simply put: cross-border trading is good business.
If you're exploring international shipping, starting with our neighbors to the north and south is a smart move. But while getting yourself there is relatively painless — a peek at your passport and customs declarations at the airport — there are more nuances to manage when it comes to shipping freight or small packages across our closest borders.
Meet the United States-Mexico-Canada Agreement
By age, the North American Free Trade Agreement (NAFTA), was a relatively young 25 years old. But in July 2020 it was replaced with a newer model: the United States-Mexico-Canada Agreement (USMCA) meant to streamline North American trade while offering significant benefits to U.S. businesses looking to ship cross-border.
What are the biggest differences with the USMCA?
In a world increasingly focused on faster, easier shipping options, the USMCA changes, which make great strides toward more balanced regulatory systems, go a long way toward creating happier customers. While all international freight and small package shipping benefit, e-commerce shippers likely experience the biggest differences:
Higher de minimis thresholds that reduce duties and taxes
Like it sounds, de minimis is the minimum threshold for which goods are charged customs duties or taxes. The USMCA increased these as follows:
- U.S. to Canada: CA$40 and less not subject to customs duties and taxes; CA$41-150 subject to taxes only
- U.S. to Mexico: US$50 and less not subject to taxes; US$51-117 not subject to customs duties and taxes
If you're considering importing goods from either country, the U.S. de minimis remains unchanged, with goods valued at US$800 and less exempt from customs duties and merchandise processing fees.
Reduced documentation requirements for lower-value items
International shipping paperwork is enough to make you need a vacation. Luckily, for goods under a certain low-value threshold, less documentation is required meaning less time buried under mountains of forms, more time tending to happy customers. Low-value thresholds for each country are:
- US$1,000 for goods destined to Mexico from Canada or U.S.
- US$2,500 for goods destined to U.S. from Canada or Mexico
- CA$3,300 for goods destined to Canada from U.S. or Mexico
These goods generally qualify for "preferential treatment" under USMCA rules of origin and can simply be accompanied by a written certification such as: "I hereby certify that the goods covered by this shipment qualify as an originating good for the purposes of preferential tariff treatment under the USMCA."
Quicker cross-border customs clearance for more shipments
It stands to reason that less administrative work and new procedures including e-signatures and self-certification of origin means less red tape at the border, helping speed shipments through customs.
But one thing is certain: no matter how much less paperwork is required, you must still be diligent, complete all required forms and fields, and be aware of the regulatory requirements surrounding your specific goods to ensure a speedy cross-border shipping trip.
Prepare key documentation for international shipping
What happens to all those international freight and small package shipments that don't meet low-value thresholds? Unfortunately, they're still form-heavy. But a little legwork up front will help export your goods across the border with ease:
To Mexico — Register with the Official Register of Importers and provide a Mexican Import Request document, certificate of origin, commercial invoice (in Spanish), bill of lading (BOL), packing list, shipper export declaration (when shipment value is $2,500 or more), documentation guaranteeing payment of additional duties for undervalued goods and product safety documentation when applicable. Two copies of your commercial invoice are sometimes required.
To Canada — In addition to the importer or customs broker submitting the Customs Coding Form B3-3, a Canada Customs Invoice, certificate of origin and BOL are required, and more may be necessary depending on the shipment.
When cross-border shipping requires a Certification of Origin (COO)
Any shipment exported to Canada valued at more than CA$3,000 or to Mexico valued at more than US$1,000 or imported to the U.S. valued at more than US$2,500 requires a COO. Luckily, this can be completed by the importer, exporter or producer, so you have some help, and the elements can be provided on any existing document including a commercial invoice or BOL.
It must include nine mandatory data elements:
- Identification of the certifier (importer, exporter or producer)*
- Certifier name, address (including country) and contact information*
- Exporter name, address and contact info (if not the certifier)
- Producer name, address and contact info (if not the certifier)
- Importer name, address and contact info (if not the certifier)
- Goods description and Harmonized Tariff Schedule (HSTUS) number (to, at least, the 6-digit level)
- Origin Criteria
- Blanket period (if applicable, date range up to a 12-month period)
- Signature and date, including the following statement: "I certify that the goods described in this document qualify as originating, and the information contained in this document is true and accurate. I assume responsibility for proving such representations and agree to maintain and present upon request or to make available during a verification visit, documentation necessary to support this certification."
* Both fields are new with the USMCA.
Big considerations for international shipping logistics
Expanding into cross-border trade takes more than a few extra forms to make dollars and cents for your business. The same logistics you use for your supply chain domestically now take on new dimensions:
- Currency conversion — Properly price your items for the local currency to ensure you're achieving the right profit margins.
- Return policies — Build a thorough cross-border return policy, addressing guarantees, warranties, the return service method and timeline, and who pays for it all.
- Country regulations — Just because your products pass U.S. environmental or safety regulations doesn't mean they'll meet the neighbors' — do your research to avoid surprises.
- Duties and taxes — Importers or customs brokers generally cover duties and taxes, but make sure everyone understands the division of responsibility up front.
- Transit times — In addition to longer distances, cross-border shipments may be held until duties are paid. An experienced carrier, customs broker, or importer can help reduce delays.
Get help with shipping from U.S. to Canada and Mexico
Sometimes you just need a travel buddy. That's what we're here for. Let Worldwide Express use our network of international-ready carriers and our team of international shipping experts to help identify the right solution for your cross-border shipments. Get a quote today to see all the available options to meet your timeline and budget, and start stamping your shipping passport!