By Jill Hurley
In the trade-management world, we often hear from importers and exporters that the core tenets of trade management—classification, qualification/origin, valuation, etc.—were overlooked until a particular catalyst sparked a reaction.
In today’s environment, such catalysts abound. And over the next 60 days or so there are a handful of events that could spur those engaged in international trade into protective reaction.
USMCA Review
On July 1, 2026, the United States-Mexico-Canada Agreement (USMCA) will either be renewed or put up for further review. Whatever the outcome, it is unlikely the agreement will emerge from the review without modifications made in both the short and long term. Those modifications will require importers across North America to revisit their USMCA-certification to determine whether their goods continue to qualify or not.
That means reviewing potentially thousands of HS codes, soliciting or re-soliciting innumerable suppliers for origin and material input data, cross-referencing that data with the new requirements and determining whether or not products still qualify under the agreement.
That’s a tall order even for well-resourced teams with deep knowledge of trade compliance. Most teams are ill-equipped to manage that level of change, particularly when it comes with little notice (and it often does in today’s environment).
Organizations that rely heavily on free trade agreement qualification to reduce duty outlay should ensure they are well equipped to manage changes to their certification in the coming weeks and months in the event alterations are made to the trade deal.
That could be through expert outsourcing of the solicitation, requalification and recertification; the insourcing of sufficient personnel; or, through the investment of technologies that support in-house teams manage the associated tasks and resulting data in a manner that ensures compliance.
Chinese-connected vehicles
The original renegotiation of NAFTA into what is today the USMCA had more impact on the auto sector than any other. The Rules of Origin for the auto sector required a higher percentage of regional content to be considered originating in North America and required higher levels of North American steel to be used. The mechanism to calculate these values was onerously complex and is still a point of contention between the parties despite a dispute-panel ruling that favored the Canadian and Mexican interpretations of the calculation over the U.S. interpretation.
Add to that the tariffs introduced on steel and aluminum products, as well as steel and aluminum derivatives (on both sides of the Can-Am border), and you have an industry under significant strain to remain trade compliant over the last six years.
To further complicate things for automakers and auto dealers, an executive order introduced in January 2025 made it illegal for Chinese-made connected vehicles or even vehicles containing Chinese parts from being imported and sold in the U.S.
If recent history is any indication, the burden of proof will ultimately lie with the importer, meaning automakers and auto parts manufacturers will have to prove the vehicles they are importing (both finished and unfinished) are not in contravention of the legislation. That will require an additional layer of compliance that too will demand strong solicitation mechanisms and equally strong centralization of data and documentation to provide to customs authorities should the need arise.
New pharma tariffs
Lastly, pharma companies importing patented or branded pharma products and/or their active ingredients will be facing steep tariffs of 100% beginning July 31, 2026, on the percentage of their products that are not U.S. originating.
In many cases, patented pharmaceuticals use active ingredients produced in the U.S. and then exported to Europe or Asia for final formation before being imported back into the U.S. In the current tariff iteration of the Section 232 pharma tariffs, duties are levied on the entire value of the product, not just the non-originating component, and traditional Chapter 98 exclusions don’t apply.
Being proactive means saving much more time and money down the road
These are the sorts of developments to which many importers and exporters turn a blind eye. It’s often a “tomorrow problem.” But tomorrows seem to creep up unexpectedly more and more these days. That’s why planning in advance for the possibility of greater compliance scrutiny can help guard against supply and production disruption. Waiting until there’s a reason to invest energy into compliance is usually too late.
Jill Hurley is Senior Director, Global Trade Consulting, U.S. at Livingston, and a non-practicing licensed attorney specializing in trade. As the practice leader, she spearheads U.S. import and export projects, offering comprehensive reviews of clients’ business models for risk assessment, crafting, and implementing import/export compliance programs, conducting audits, navigating export licensing requirements, and providing support in U.S. trade remedy matters.