5 Ways CUSMA (NAFTA 2.0) Will Affect Your eCommerce Business

NAFTA is dead, long live CUSMA ( NAFTA 2.0). 

On July 1st, 2020 during a worldwide pandemic, the Canada-United States-Mexico trade agreement came into effect. 

We’ve all heard the stories. eCommerce surges, everyone getting their food delivered at home, buying sprees, sales and bankruptcies. So much is happening that we wouldn’t blame you if the new agreement slipped through the cracks of your eCommerce news feed.

Well, there is no reason to fret. Are you an eCommerce business? Yes? Then let us cut through the poultry and car manufacturing side of the deal and let us explain how it affects you, the eCommerce business owner.

Here are the 5 ways the CUSMA  affects your eCommerce Business:

  1. Cross Border Duties and Taxes Change

US border inspection sign

The “de minimis level”  has been increased.

What does this phrase mean you may ask? Basically, the "de minimis" threshold refers to the value below which goods can be shipped into the country before duties and taxes are assessed. 

How does this apply to you?

Well, if you have any products that you have to import/ship to Canada from the US, your customers no longer  have to pay any import duties on shipments with a declared value of  $150 CAD or less. However, your customers will still be subject to local GST/HST if their order’s declared value is higher than $40 CAD.

       2. Digital Products Are Now Duty-Free

phone that has a tax free sign

If you have a digital product based storefront and sell across the CUSMA countries, we have good news. E-books, software, music and games, will now be completely duty-free. 

       3. Digitization of Laws

technology-law

There will be an active effort to digitize all regulations, tariffs, taxes and other fees. There will also be an online searchable database of customs information for the trade community. 

       4. Streamlined Procedures 

clipboard with employer identification number sign on it

Say goodbye to red tape, or at least expect less of it. All three participating countries in the agreement have committed to “fewer customs formalities than those applied under formal procedures” to shipments valued less than $2,500.

As the agreement goes into effect, all shipments valued at and below $2500 will be treated as express shipments. This will mean sellers will no longer have to worry about “employer identification numbers” for their shipments. I don’t know about you, but to us, that sounds like good news for small businesses!

       5. Data Costs Lower

two people infront of a screen looking at data

In the past, as a Canadian eCommerce retailer, you were required to store all Canadian customer data in Canada itself.

However, due to the change in the laws,  if you sell in the United States and have US customer data, you may store it in Canada as well. The bottom line? Lower data costs with  increased  options on how and where to store data. 

Are you still curious to find out more about CUSMA? Well in that case you're in luck! The Canadian Government has tools and resources for small businesses to help you adjust to the new trade deal.

That’s the scoop on the new changes in the eCommerce cross border shipping world. We hope the application of these new laws helps your business grow.  If you’d like to learn more about eCommerce check out our blog.