The U.S. Department of Commerce has clarified how “U.S. content” will be calculated for certain Canadian and Mexican products that qualify for preferential treatment under the Canada-United States-Mexico Agreement (CUSMA/USMCA).
The guidance is particularly relevant to Canadian companies exporting certain mobile industrial equipment and parts to the United States, including forklifts, loaders, backhoes, bulldozers, tractors, mobile cranes and similar machinery.
Under the new rules, qualifying products can receive a reduced Section 232 tariff on the portion of their value that is attributable to U.S. content. Up to 40% of the product’s value can qualify for this treatment, with the remaining non-U.S. content generally subject to a 25% tariff. The effective minimum duty under this mechanism is 15%.
What counts as U.S. content?
For products entered into the U.S. beginning October 14, 2026, U.S. content can include:
- The value of parts that are wholly obtained, produced, or substantially transformed in the United States.
- The value of U.S.-melted and poured steel and U.S.-smelted/cast aluminum or copper, where that value has not already been captured as part of a U.S.-origin component. thefederalregister.org
What this means for Canadian manufacturers
Canadian companies exporting affected products should review their U.S. supply chains and product costing to determine whether they can take advantage of the reduced tariff treatment.
Companies may need more detailed documentation showing:
- Where key components were manufactured or substantially transformed.
- Where steel, aluminum and copper were processed.
- The value of U.S.-origin components incorporated into finished products.
- Cost and sourcing information that can substantiate any U.S.-content claim.
Importantly, CUSMA qualification and U.S. content are two separate considerations. A product must qualify under CUSMA, but that does not automatically determine how much of its value can be treated as U.S. content for tariff purposes.
CTMA members exporting machinery or components to the U.S. should speak with their customs broker or trade advisor to determine whether these provisions apply to their products and whether their current documentation is sufficient to support a U.S.-content claim.
This article is intended as general information only and should not be considered legal or customs advice. You can read the full article here.