CUSMA Review 2026: What Canadian Importers Should Watch

Key Takeaways

• CUSMA preferential claims filed via CAD must meet origin certification rules that have been in force since 2020, and those rules won’t change during annual reviews.
• Apparel, automotive, and steel importers relying on zero MFN rates under CUSMA would face 6.5% to 18% tariffs if the agreement were disrupted.
• CARM Phase 2 Release 3 tied CUSMA origin documentation to the importer’s Client Portal account, not the broker’s, shifting audit exposure upstream.
• Most CBSA origin verifications triggered by the review process take 90 to 180 days and freeze drawback claims on affected entries until resolved.

Annual Review, Permanent Implications

Retail, manufacturing, and apparel industry groups publicly backed CUSMA preservation during this year’s review cycle. The agreement has been in force since July 1, 2020, and Article 34.7 mandates an annual joint review by the three member governments. The review itself is procedural. It does not reopen the treaty text or trigger automatic renegotiation. But it does create a window for member states to surface complaints, and those complaints can escalate into consultations, dispute panels, or formal amendment proposals.

For Canadian importers filing Commercial Accounting Declarations with CUSMA preferential claims, that procedural window carries real risk. A CUSMA origin claim on a CAD drops the MFN duty rate to zero for most goods meeting the agreement’s rules of origin. If the agreement were suspended or renegotiated with stricter origin thresholds, importers would revert to MFN rates ranging from 6.5% on industrial goods to 18% on apparel. The math is not subtle.

What CUSMA Preference Means on a CAD

CUSMA replaced NAFTA on July 1, 2020. Canadian importers claim preferential treatment by declaring tariff treatment code 10 on the Commercial Accounting Declaration filed through the CARM Client Portal. The claim itself does not require upfront submission of the origin certification. CBSA expects the importer to hold a valid CUSMA certification from the producer, exporter, or to claim based on the importer’s own knowledge if the goods are produced in-house. That certification can be requested later during a verification or audit.

The origin certification must state that the good qualifies under CUSMA’s HS 6-digit product-specific rules of origin. Those rules vary by tariff classification. Some require a tariff shift (e.g., fabric woven in the U.S. cut and sewn in Mexico qualifies). Others impose a regional value content threshold, typically 50% to 75% depending on the calculation method. Automotive goods follow even stricter rules, including steel and aluminum melting requirements and labor value content floors introduced in the 2020 renegotiation.

Most Canadian brokers see CUSMA claims on apparel, automotive parts, steel products, consumer electronics, and food ingredients. The preferential rate is zero in nearly all cases, compared to MFN rates that range from 0% (some raw materials) to 18% (finished apparel). Loss of that preference would directly increase landed cost unless the supplier absorbs the duty through a price cut.

Where the 2026 Review Could Bite

The industry groups calling for CUSMA preservation are not overreacting. The agreement includes a six-year review clause (Article 34.7) and a 16-year sunset provision unless all three parties agree to extend. The 2026 annual review is the sixth since entry into force, putting it at the midpoint of the sunset countdown. Political pressure to extract concessions is highest at these milestones.

Two areas brokers are watching: rules of origin enforcement and de minimis thresholds. CBSA has ramped up CUSMA origin verifications since 2023, targeting automotive and textile sectors where non-originating inputs from China, Vietnam, and India are common. A verification under D11-4-20 can take 90 to 180 days and freezes the importer’s ability to amend or draw back the affected entries until CBSA closes the case. If the verification fails, CBSA assesses the MFN duty plus interest, and the importer loses eligibility to claim CUSMA preference on that supplier’s goods until the origin issue is resolved.

De minimis is the other flashpoint. CUSMA allows up to 10% non-originating content by value for most goods without disqualifying the claim, but that tolerance does not apply to certain automotive, textile, and agricultural products. U.S. industry groups have lobbied to tighten the tolerance or eliminate it entirely for Chinese inputs. If that change were negotiated, Canadian importers would need to re-certify origin on thousands of SKUs and potentially switch suppliers.

CARM Phase 2 Shifted the Burden

CUSMA origin claims have always been the importer’s responsibility, but CARM Phase 2 Release 3 made that burden explicit. Before CARM, brokers often held origin certifications on behalf of clients and produced them during verifications. CARM ties the origin documentation requirement directly to the importer’s CARM Client Portal account. The importer must upload and maintain origin certifications, supplier declarations, and production records in their own system. CBSA can request those documents during an audit, and failure to produce them within the statutory deadline results in denial of the claim and assessment of MFN duty plus penalties under the Administrative Monetary Penalty System.

For importers using bonded warehouse storage to defer duty payment, the origin claim is locked in at the time of release prior to payment. If the claim fails verification months later, CBSA assesses the duty difference against the RPP bond and issues a K84 monthly statement. Importers with thin bond coverage relative to import volume can hit their security ceiling fast if multiple verifications land in the same month.

Broker Recommendations Through the Review Cycle

We are telling clients to audit their CUSMA claim population now, before CBSA does it for them. Pull a year’s worth of CAD filings where tariff treatment code 10 was declared. Confirm you hold a valid origin certification for each HS 6-digit line. If the certification is blanket (covering 12 months of shipments), confirm it has not expired. If it is per-invoice, confirm it matches the CAD exactly.

For high-volume SKUs, request a supplier declaration breaking down the regional value content calculation. If the non-originating content is close to the de minimis threshold, flag it. If the calculation relies on the transaction value method and your supplier’s pricing has changed, recalculate. A certification that was valid in 2023 may no longer qualify if input costs shifted.

For goods warehoused in Canada pending final sale, review the origin claim at the time of entry into bonded storage. CBSA allows importers to defer the CUSMA claim until removal from warehouse, but that flexibility creates risk if the certification expires during the storage period. Most Montreal sufferance warehouse operators see 30 to 90-day dwell times for goods awaiting final buyer allocation. A blanket certification with a 12-month validity that was issued 11 months before warehouse entry will expire before removal, disqualifying the claim unless renewed.

For importers in automotive, textiles, or steel, expect CBSA verification activity to stay elevated through the review period. CBSA does not publicly disclose verification targeting criteria, but the pattern since 2023 has been clear: high-value goods with complex supply chains in sectors where non-CUSMA inputs are common. If you receive a verification letter, respond within the 30-day deadline. Failure to respond triggers automatic denial and assessment.

Review Does Not Mean Renegotiation, But Prepare Anyway

The CUSMA annual review is not a renegotiation. It is a status check. But the political pressure around it is real, and the tariff math for importers losing preferential treatment is brutal. Apparel importers would see duties jump from zero to 16% overnight. Automotive parts would go from zero to 6.5%. Steel products would range from zero to 6.5% depending on classification.

Brokers cannot control what happens in the review meetings. We can control whether our clients’ origin documentation will survive a verification. The time to audit that documentation is now, while the claim is still live and fixable. Waiting until CBSA sends the verification letter costs you the 30-day window to gather records and negotiate with suppliers.

If your CUSMA claim inventory has not been reviewed since 2023, or if your suppliers have changed pricing or sourcing in the past 12 months, let’s walk through it. The annual review cycle is an administrative milestone. A failed origin verification is a cash assessment.

Frequently Asked Questions

What is the CUSMA annual review?

Article 34.7 of CUSMA requires the three member countries to meet annually to review the agreement’s implementation and address concerns. The review does not automatically trigger renegotiation, but it can surface issues that lead to consultations or dispute panels.

How do I claim CUSMA preferential duty treatment on a CAD?

You declare the preferential tariff treatment code (e.g., 10 for CUSMA) on your Commercial Accounting Declaration filed through the CARM Client Portal. You must hold a valid CUSMA origin certification from the producer or supplier at the time of import, though CBSA does not require you to submit it upfront unless requested during a verification.

What happens if CUSMA origin rules change?

Origin rules are embedded in the treaty text and require formal amendment, not annual review tweaks. Changes would follow the same process as the 2020 entry into force, giving importers at least 12 months’ notice to adjust supply chains and documentation.

How long does a CBSA CUSMA origin verification take?

Per D11-4-20, CBSA has up to 2 years to complete an origin verification, but most close within 90 to 180 days. During that window, affected entries cannot be amended or drawn back, and the importer must produce the origin certification and supporting production records.

Which sectors would be hit hardest if CUSMA preferential rates disappeared?

Apparel (MFN rates 16% to 18%), automotive parts (MFN 6% to 8.5%), steel and aluminum products (MFN 0% to 6.5%), and consumer electronics (MFN 0% to 8%) all depend on CUSMA zero-rate treatment. Loss of preference would directly increase landed cost for importers without supplier price renegotiation.

Do I need a certificate of origin for every CUSMA shipment?

No. CUSMA allows importers to claim preference based on the importer’s knowledge, the exporter’s certification, or the producer’s certification. You must hold one of those three forms of support, but you do not file it with the CAD unless CBSA asks for it during a verification or audit.

Can I retroactively claim CUSMA preference if I paid MFN duty by mistake?

Yes, via a CARM adjustment request within 4 years of the original CAD acceptance date. You will need to produce the origin certification and any supporting production or material records CBSA requests to validate the claim.

Source: Supply Chain Dive