Trade Agreements: How to Qualify for Preferential Tariff Rates
Learn how free trade agreements like USMCA and KORUS can reduce or eliminate your import duties, and what documentation you need to qualify.
Published February 20, 2026
What Are Preferential Tariff Rates?
Under free trade agreements (FTAs), goods that meet certain criteria can enter the US at reduced or zero duty rates. These "special" rates are listed in the HTS under Column 1 Special.
Active US Free Trade Agreements
The US currently has 14 FTAs with 20 countries:
- USMCA: Canada, Mexico
- KORUS: South Korea
- US-Australia FTA
- US-Singapore FTA
- US-Chile FTA
- US-Colombia TPA
- US-Peru TPA
- US-Panama TPA
- CAFTA-DR: Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua
- US-Bahrain FTA
- US-Israel FTA
- US-Jordan FTA
- US-Morocco FTA
- US-Oman FTA
Rules of Origin: The Key Requirement
To claim preferential rates, goods must "originate" in the FTA partner country. This typically means:
Wholly Obtained
The product was entirely grown, mined, or produced in the FTA country.
Substantial Transformation
The product was sufficiently processed or manufactured in the FTA country. Each FTA has specific rules, which may include:
- Tariff Shift Rules: The finished product must be in a different HTS chapter/heading than the imported inputs
- Regional Value Content (RVC): A minimum percentage of the product's value must originate in the FTA region
- Specific Process Rules: Certain manufacturing steps must occur in the FTA country
Documentation Needed
Certificate of Origin
Most FTAs require a certificate or certification of origin. Under USMCA, a certification can be on any document (no prescribed form) and must include:
- Certifier information
- Exporter and producer information
- Product description and HTS code
- Origin criterion met
- Blanket period (if applicable)
Record Keeping
You must maintain supporting records for 5 years, including:
- Purchase orders and invoices
- Production records
- Material sourcing documentation
- Cost accounting records
Common Pitfalls
- Not verifying origin before importing (assuming the supplier's claim is correct)
- Using the wrong origin criterion
- Not maintaining adequate records for CBP verification
- Claiming preference without a valid certification