A **Free Trade Agreement (FTA)** is a treaty between two or more countries designed to facilitate trade by reducing or eliminating barriers, including import duties and tariffs. Understanding how FTAs work allows importers to lower their landed costs.
1. Preferential Tariff Rates
When an FTA is in place, participating nations designate **preferential tariff rates** (which are frequently 0%) for qualifying goods. Importers must explicitly claim this treatment during customs entry.
2. Rules of Origin
To prevent third-party countries from abusing tariff exemptions (e.g. shipping goods from China through Mexico to the US), FTAs require imported items to satisfy strict **Rules of Origin**:
* Wholly Obtained: The product must be grown, mined, or entirely produced in the FTA partner country.
* Substantial Transformation: Non-originating materials must undergo significant local processing, resulting in a tariff classification change (tariff shift) or meeting regional value content (RVC) thresholds.
3. How to Claim FTA Status
To claim preferential rates, the importer must possess a valid **Certificate of Origin** completed and signed by the exporter or producer. Keep these records on file for audits by border agencies (such as CBP or HMRC), as they can audit claims retroactively for up to 5 years.
Calculate Global Landed Costs
Use our custom calculator to check the impact of duties and local sales taxes on your international shipments.
Open Customs CalculatorWhy Traders Trust Our Tariff Analysis
We track bilateral trade tariffs, retaliatory surcharges, and country-specific exclusions to protect B2B margins:
- Section 301 Protection: Automatically identifies additional trade surcharges on imports from China.
- Bilateral Trade Concessions: Integrates most-favored-nation (MFN) rates and tariff-rate quotas (TRQ).
- Exclusion Tracking: Monitors exclusions announced by official trade representatives like the USTR.
How to Verify Bilateral Tariffs
- Specify Trade Partners: Choose your exporting origin and importing destination countries.
- Identify Protective Surcharges: Check if your product falls under Section 301 or Section 232 steel/aluminum programs.
- Confirm Exclusions: Review active exclusions list to verify if your commodity qualifies for relief.
Frequently Asked Tariff Policy Questions
What are Section 301 tariffs?
Section 301 tariffs are additional protective duties imposed by the United States on specific categories of goods imported from China, designed to offset unfair trade practices.
How do retaliatory tariffs affect import costs?
They are added as ad-valorem percentages on top of basic customs duties, raising the landed cost of target imports to favor domestic manufacturers.
Where can I check for active tariff exclusions?
Active exclusions can be checked on official trade representative databases (such as the USTR portal in the US or HMRC trade notices in the UK).