Guide

Making it nearby does not automatically change the duty

Updated

The most expensive assumption in nearshoring is that a change of country automatically changes the duty position. Origin is a technical determination about the goods, not about the port they left from.

What the rules do

The USMCA sets rules of origin determining whether goods qualify for preferential treatment. They turn on things like where materials came from and what transformation occurred, and they are specific to the goods.

So a part machined nearshore from material that does not qualify may not itself qualify, and the freight saving does not compensate for a duty assumption that was wrong.

Classification comes first

Duty rate, admissibility and which origin rule applies all follow the Harmonized System code. Getting the classification right precedes every other trade question in the analysis.

Have the finished part classified before you model any saving, by someone qualified to do it.

Documentation is your problem

If you intend to claim preferential treatment, the supporting documentation matters and the responsibility sits with the importer.

Agree at the outset what the supplier will provide and in what form. Retrofitting it after the first shipment is much harder and sometimes impossible.

Model both outcomes

Run the case with and without preferential treatment. If it only works with it, you have a case that depends on a determination you have not yet obtained.

That is worth knowing before you move production rather than after.

Model it before you move it

The eight dimensions that decide a nearshoring case, which way each points, and how to put a number on the ones nobody counts.

See the comparison