USMCA vs. Section 301: Which Trade Agreement Applies to Your Imports in 2026

Two Policies, Different Mechanisms

USMCA provides preferential duty rates — it REDUCES the General rate to zero or near-zero for qualifying goods. Section 301 imposes additional duties — it ADDS a tariff layer on top of the General rate for goods of Chinese origin. They operate independently: a product can qualify for USMCA zero-duty on the General rate while still being subject to Section 301 additional duty because the Section 301 applies based on Chinese origin, not the preferential claim.

Decision Framework

1. Determine HTS classification
2. Check country of origin per CBP substantial transformation rules
3. If origin is Canada/Mexico: apply USMCA preferential rate to General duty (not Section 301)
4. If origin is China: apply General rate + Section 301 additional duty — USMCA does NOT override Section 301 for Chinese-origin goods transshipped through Canada/Mexico

Critical Warning on Transshipment

CBP has significantly increased enforcement against goods manufactured in China, shipped to Canada/Mexico for minor processing, then imported to the US claiming USMCA preference. The USMCA's strict rules of origin — particularly for automotive (75% regional value content) and textiles (yarn-forward rule) — are designed to prevent this. CBP audits of USMCA claims have tripled since 2024.