The new trade agreement among the U.S., Canada, and Mexico offers many benefits to online retailers, including no longer requiring shoppers to pay for some cross-border orders.
The new trade deal known as the U.S.-Mexico-Canada Agreement (USMCA) takes on the basic framework of the former North American Free Trade Agreement (NAFTA). It also gives online retailers key benefits.
Changes in Minimum Value for Imported Shipments
Under the agreement, both Mexico and Canada will boost the minimum value of an imported shipment that is subject to duty collection and customs documentation. Mexico is doubling its minimum value threshold to $100 from $50, and Canada is increasing its minimum value threshold to C$40 from C$20.
Changes to Charges on Cross-Border Online Orders
The trade agreement also means that Canadian consumers no longer have pay duty for cross-border online orders that cost less than C$150. Mexican shoppers will not pay duty on cross-border online orders that are the equal to $117 or less. The arrangement essentially makes it simpler for these type of orders to ship among the U.S., Canada, and Mexico.
Smaller and Midsized Businesses Win
Most importantly, it will make it easier for more businesses, specifically smaller ones, to get in on cross-border trade. In many cases, smaller and midsized merchants often do not have the extra funds to pay customs fees and taxes.
Also, merchants entering the markets in Mexico and Canada for the first time will also benefit from paying less to reach customers. For the most part, the U.S.’s express delivery carriers carry many low-value shipments for these type of merchants, so there is a good chance that they will see benefits, such as cheaper costs and greater efficiency, too.
Other Important New Benefits in the Deal
The new trade deal also provides digital product and intellectual property protections.
When it comes to digital products, it bans custom duties on:
Additionally, the digital products clause in the deal ensures that suppliers are not restricted in their use of electronic authentication or electronic signatures. By allowing this, it provides an environment where digital transactions can thrive while also guaranteeing that enforceable consumer protections, such as privacy and unsolicited communications, are applied to the digital product sales.
As for intellectual property, the new trade deal includes much stricter protections for patents and trademarks that encompass all areas of the industry.
Now, is the best time for online retailers to take advantage of the benefits USMCA has to offer. Start by obtaining a Canadian merchant account so your business can accept and process credit card payments.
When you are ready to apply for a Canadian merchant account, consider a merchant account services provider, like eMerchantBroker.com (EMB). It specializes in working with Canadian-based businesses and high-risk businesses, as well as merchants of all types and sizes. EMB is not only a trusted, reliable payment solutions provider, it offers a simple and fast online application process.