The North American Free Trade Agreement (NAFTA), which entered into force on January 1, 1994, created one of the world's largest free-trade areas. Under NAFTA, import duties on all covered goods traded within the United States (US), Canada and Mexico were gradually phased out and, as scheduled, on January 1, 2008, all remaining duties and most quantitative restrictions on imports were eliminated. While heavily relied on by businesses to integrate the North American economy, NAFTA has become a focal point of President Trump's efforts to establish a trade policy that promotes America's security and prosperity by, among other initiatives, strengthening the US economy, negotiating new and renegotiating or withdrawing from other trade agreements and enforcing US trade laws and US rights under existing trade agreements. On August 27, after more than a year and seven NAFTA renegotiation rounds, Mexico and the US announced a "preliminary agreement in principle." The agreement is not final, but rather it is subject to finalization and implementation that replaces the 24-year old original trade deal. Canada has now officially rejoined the US and Mexico negotiators to potentially join and maintain a trilateral agreement, but the ultimate outcome remains uncertain.

An Indirect Tax Services group Alert, attached below, provides additional details.

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