If your US business relies heavily on importing and exporting, it’s important to know which countries have the lowest trade barriers. The US has 14 free trade agreements (FTAs) with 20 countries. Exporting to and importing from these countries will be more cost-effective because you can save money on tariffs (import taxes).
Why should you consider trading with US free trade countries?
- You pay reduced tariffs or no tariffs at all.
- Customs procedures are more streamlined for goods moving between countries with free trade agreements.
- Free trade agreements improve rules for intellectual property, protection for the environment, e-commerce sales, and procuring government contracts.
Here’s a list of all 14 US free trade agreements, and how you can use them to your advantage as a small business owner.
1. Australia
The United States-Australia Free Trade Agreement (FTA) entered into force on January 1, 2005. The agreement eliminated tariffs on more than 99% of qualifying manufactured goods exported to Australia. It also opened up markets for certain service goods, like life insurance. There are better intellectual property rules in place thanks to this agreement. US farm exports also have duty-free treatment, including processed foods, fruits, vegetables, corn, and soybeans.
Looking for free trade solutions between Canada and Australia? Read our guide to importing and exporting from Australia for the Canadian business.
2. Bahrain
The United States-Bahrain FTA took effect in 2006. It has allowed the free flow of industrial and consumer goods between the two countries, without tariffs. US farmers have increased exports to Bahrain and Bahrain has opened up its markets to service providers. Since the implementation of the FTA, US exports to Bahrain have gone up 301%, with top export categories being aircraft, machinery, vehicles, and electrical machinery.
3. USMCA
The United States Mexico Canada Agreement (USCMA) effectively replaced the North American Free Trade Agreement (NAFTA) as of July 1, 2020. It covers many areas of trade and foreign investment between the US, Canada, and Mexico. Almost all goods shipped between the three countries are eligible for duty-free treatment. It also bolstered intellectual property and copyright requirements and required each country to raise their de minimis rates (which allows goods of higher value to pass through borders tax-free). The USCMA agreement was the first time in decades that Canada agreed to raise its de minimis rates.
Are you a Canadian business looking for a list of Canada’s free trade agreements? Check out our guide.
4. Chile
The United States-Chile Free Trade Agreement started in 2004 and has eliminated tariffs and has opened markets. As of 2015, all goods originating from the US can enter Chile duty-free. This is particularly beneficial to farmers, ranchers, and producers of construction equipment.
5. Colombia
The United States-Colombia Trade Promotion Agreement started in 2012 and allows over 80% of US exports to enter Colombia duty-free. US products with duty-free access include agricultural and construction equipment, aircraft and parts, fertilizers and agrochemicals, information technology equipment, medical and scientific equipment, and wood. The remaining tariffs are to be phased out over the next 10-15 years.
6. CAFTA-DR
The Dominican Republic-Central America Free Trade Agreement (CAFTA-DR) is a free trade agreement between the US and a group of Central American countries, including:
- Costa Rica
- El Salvador
- Guatemala
- Honduras
- Nicaragua
- Dominican Republic
All the countries in this agreement represent the US’s 18th largest goods trading partner, with $57.4 billion in goods total exchanged. CAFTA-DR has opened up opportunities for regional manufacturing, helped strengthen workers’ rights, and created more investment opportunities.
7. Israel
The United States-Israel Free Trade Agreement is the oldest FTA currently in force for the US. Since the agreement first took effect in 1985, US exports to Israel have risen by 456%. The agreement has made it easier for exporters to gain approvals for duty-free status for individual products. Top US exports to Israel include precious metals and stone, machinery, aircraft, electrical machinery, and optical and medical instruments.
8. Jordan
The United States-Jordan Free Trade Agreement has helped improve labor standards in Jordan. US exports to Jordan were an estimated $2 billion in 2017. Jordan is also part of the Qualifying Industrial Zones (QIZs) program, which allows products to enter the US duty-free if they’re manufactured in Jordan, Egypt, or the West Bank and Gaza.
9. Korea
The US-Korea Free Trade Agreement is with the Republic of Korea (South Korea). South Korea is the US’s sixth-largest goods trading partner with $134 billion total flowing both ways in 2019. Since the agreement entered into force in 2012, almost 80% of US industrial goods exports to South Korea became duty-free. These goods include aerospace equipment, agricultural equipment, auto parts, chemicals, consumer goods, building products, travel goods, paper products, electrical equipment, environmental goods, scientific equipment, and shipping and transportation equipment.
10. Morocco
Since the FTA between the United States and Morocco entered into force in 2006, exports from the US to Morocco have increased, and trade barriers have been reduced. The agreement focused more on economic and political reforms in Morocco, although Morocco has become the 55th largest export market for US goods.
11. Oman
The US FTA with Oman took effect in 2009 and eliminates most tariffs, especially for agricultural goods. The US provides duty-free access to Oman’s agricultural products on 100% of goods, and Oman provides duty-free access to US exports on 87% of agricultural goods. Also, all bilateral trade in industrial and consumer products is duty-free, with the plans to phase out any remaining tariffs within 10 years.
12. Panama
The United States-Panama Trade Promotion Agreement eliminates tariffs and facilitates more trade with fewer technical barriers to trade and more organized customs administration. Over 87% of US consumer and industrial products are duty-free for import into Panama. For agricultural products, nearly 56% are eligible for duty-free import into Panama, including high-quality beef, frozen turkeys, soybean meal, soybeans, wheat, peanuts, whey, cotton, and some processed products.
13. Peru
The US free trade agreement with Peru was one of the first US trade agreements to incorporate strong environmental protections. The agreement has also helped eliminate most tariffs and provide a more predictable legal framework for investors. More than two-thirds of US farm exports became duty-free when the agreement entered into force in 2009, its goal to eliminate tariffs on all farm products by 2026. The agreement also has provisions against illegal logging and illegal trade in wildlife.
14. Singapore
The US FTA with Singapore has helped US businesses invest and operate in Singapore, and has eliminated tariffs. All Singaporean tariffs for US goods are at zero, and the US has export opportunities for several manufacturing sectors, including medical instruments and equipment, microelectronics, photo equipment, some textiles, pharmaceuticals, and chemicals.
Need more tips on importing and exporting to Southeast Asia? We’ve got you covered with our handy guide.
A customs broker by your side
Is the country you’re importing or exporting to not on this list? You can use our free import duty calculator to find out how much you’ll owe in taxes. And if you need assistance moving your goods across borders, give the experts at Border Buddy a call.