For years, the natural expansion for a Canadian brand was the United States. Today, many Canadian companies are looking to diversify their markets, and Mexico is on the list for clear reasons: it is a partner in the same North American trade agreement, has over 130 million inhabitants, and has an e-commerce sector growing on Mercado Libre, Amazon, TikTok Shop, and proprietary online stores.

What many brands discover when they start is that the trade agreement helps goods cross the border, but it doesn't solve the sales process. To sell in Mexico on a recurring basis, you need to collect payments in pesos, issue tax receipts validated by the SAT, comply with VAT obligations, and operate on marketplaces that treat foreign sellers differently. A Canadian company without a legal entity in Mexico cannot do any of that on its own.

The Merchant of Record, or MOR, is the entity that solves this part. It sells on your behalf within Mexico, collects payments, issues invoices, and manages VAT. Combined with a formal importer and warehouse operations, it allows a Canadian brand to operate like a local business without having to incorporate a company from day one.

In this article, you will see what a MOR does for a Canadian company, what the USMCA review means for you, when it makes sense to ship via courier from Canada, what requirements apply to top-selling Canadian products, and how to set up a local sales operation in Mexico.

Importing and selling are two different problems

Many Canadian companies arrive in Mexico thinking about customs: tariffs, rules of origin, and export documents. It is an important part, and if you are still at that stage, it is worth reviewing how to import to Mexico from Canada with an IOR. But once the merchandise is in Mexico, a different problem begins: selling it legally.

These are the functions involved in a complete operation:

Importer. Responsible to customs for the merchandise, applies tariff preferences when applicable, pays duties, and complies with non-tariff regulations.
Merchant of Record. Appears as the seller in every transaction, collects payments in pesos, issues the CFDI, and declares the VAT on the sale.
Payment processor. Collects payments via card, bank transfer, or cash, but does not issue invoices in your name or manage your taxes.
Fulfillment operator. Receives inventory, stores it, prepares orders, ships them, and manages returns.

The most common mistake is hiring only one of these pieces and assuming it covers the others. A payment processor does not make you a local seller. A customs broker does not sell your product. A warehouse does not issue invoices. To fully understand the difference between the first two roles, check out what an importer of record is in e-commerce and how it complements the MOR.

You will also find companies that offer Merchant of Record services in Mexico with very different models. Many focus on software and digital products, where there is no inventory or customs involved. For physical products, the value lies in having importation, sales, and delivery work under the same structure, which is how Cubbo operates in Mexico.

Why more Canadian companies are looking to Mexico in 2026

The North American trade landscape has changed. U.S. sectoral tariffs on Canadian products led many companies to seek other markets, and the governments of Canada and Mexico have strengthened their relationship. In February 2026, both countries announced a joint economic action plan during a visit to Mexico by hundreds of Canadian business representatives, according toMexico News Daily.

What changed with the USMCA review

On July 1, 2026, Mexico, the United States, and Canada held the joint review of the USMCA, known in Canada as CUSMA. According toHolland & Knight, there was no consensus to automatically extend it for another 16 years because the United States did not agree to renew it in its current form. This does not terminate the treaty or immediately change its rules. The USMCA remains in effect until 2036 and enters a stage of annual reviews, during which the parties can agree to an extension at any time.

For a Canadian company selling in Mexico, the practical conclusion is twofold. On one hand, the tariff preference remains available and it is worth taking advantage of it. On the other, rules of origin and certain sectors may be adjusted in the coming years, so your structure in Mexico must be able to adapt without having to redo the entire operation.

A market with its own habits

The Mexican buyer does not behave like the Canadian one. They pay with credit cards, SPEI transfers, cash at convenience stores, or interest-free monthly installments, and they expect to receive their order in one or two days. Mercado Libre and Amazon set that expectation, and TikTok Shop is growing rapidly in categories like beauty and personal care, where brands that deliver quickly have an advantage, as seen among fulfillment companies for TikTok Shop in Mexico.

The USMCA helps at customs, but it doesn't solve sales

The USMCA allows many products originating in Canada to enter Mexico with preferential tariffs, often at zero. To apply this, a certificate of origin is required, which does not have a mandatory official format but must include certain minimum data, and can be issued by the exporter, the producer, or, in some cases, the importer. Canada and Mexico are also part of the CPTPP, which offers a second preferential route for some products.

Origin matters more as of 2026

On January 1, 2026, Mexico increased tariffs by between 5% and 50% on 1,463 tariff lines for products from countries without a trade agreement, according toFoley & Lardner. Most of these correspond to textiles, clothing, steel, plastics, auto parts, and footwear. Goods originating in Canada under the USMCA are not subject to this increase, but there is a catch: the benefit depends on the origin of the product, not the country from which it is shipped.

If your brand designs in Toronto but manufactures in China or Vietnam, that merchandise is not of Canadian origin, even if it ships from your warehouse in Ontario. It would be subject to the general tariff, which saw one of the largest increases for clothing and footwear. Many Canadian fashion, outdoor, and accessory brands are in this situation, so check the origin SKU by SKU before calculating your margins.

What the treaty doesn't cover

Even if the tariff is zero, the USMCA does not provide you with an RFC, allow you to issue CFDI, register you in the importer registries, or exempt you from the 16% VAT on imports and sales. It also does not change the Mexican Official Standards (NOM) for labeling, health permits, or the tax rules of marketplaces. That is the part that the MOR solves.

Shipping from Canada via courier: when it works and when it doesn't

Unlike European or Asian brands, Canadian companies receive special treatment for courier shipments. According toBaker McKenzie, as of August 15, 2025, the general global rate for courier imports is 33.5%, but products from the United States and Canada have their own rules:

For values up to 50 dollars, there are no tariffs or VAT, only a processing fee.
From 50 to 117 dollars, they pay a global rate of 17%.
Over 117 dollars, they pay a global rate of 19%.

There is an important condition: these rates apply when the merchandise travels with a waybill and is not subject to non-tariff regulations and restrictions. Many cosmetics, foods, supplements, and products with labeling NOMs fall outside this simplification, and in those cases, the shipment requires formal customs clearance.

When it makes sense

Direct shipping from Canada can be useful for validating demand with a low volume of orders, especially for products without special regulations and with a low price point. It also works for customers who are willing to wait longer in exchange for a product they cannot find in Mexico.

When it stops working

When sales become recurring, the model begins to fail for reasons that are not tax-related:

Delivery time. An order from Canada takes several days, while your competitors deliver the next day from within Mexico.
Returns. Returning products to Canada is expensive and slow, and many returns end up as a total loss.
Marketplaces. Mercado Libre, Amazon, and TikTok Shop prioritize sellers with fast shipping and local operations.
Invoicing. Customers who require a CFDI, such as companies, retail stores, or professionals, cannot purchase from you.

With inventory in Mexico, you can offer fast delivery, manage returns locally, and sell like any domestic brand. That is where the MOR, the importer, and the warehouse work together.

Taxes, withholdings, and invoicing when selling in Mexico

The VAT (IVA) in Mexico is 16% and applies to both imports and sales, according to the tax summary fromPwCWhen the same Mexican entity imports and sells, the VAT paid at customs can generally be credited against the VAT charged to the customer, which reduces the impact on your cash flow.

Marketplace withholdings

As of January 1, 2026, digital platforms must withhold 100% of the VAT when the seller is a foreign resident without a permanent establishment in Mexico selling goods in the country, in addition to an income tax (ISR) withholding. For a Canadian company selling directly as a foreign entity, this means a significant portion of every sale is withheld. By selling through a MOR with a Mexican entity and RFC, the withholdings follow the domestic seller regime. The exact effect depends on your contract and each platform, so be sure to review this with your tax advisor.

The CFDI

In Mexico, the invoice that counts is the CFDI, a digital receipt issued and validated by the SAT. Companies need it to deduct their purchases, and many consumers request it. If you want to sell to stores, gyms, clinics, hotels, or distributors, you won't close the sale without a CFDI. A MOR issues it using its Mexican tax entity and your brand's information.

Currency and payments

Your costs are in Canadian dollars and your sales are in pesos. The MOR settles sales after deducting taxes, commissions, and fees, and the exchange rate between the CAD and the peso affects your actual margin. Define the settlement frequency, currency, and exchange rate in your contract. Also, check how declined payments are handled, becauseecommerce fraud and chargebacks in Mexico have their own patterns, especially with card payments.

5 Sales channels for a Canadian brand in Mexico

The MOR doesn't just solve tax issues. It also defines which channels you can sell through and under what conditions.

Your own online store. A Shopify or WooCommerce store gives you control over your brand, pricing, and customer data. For it to work in Mexico, you need prices in pesos with VAT included, local payment methods, fast shipping, and invoicing. If your store is already running in Canada, you can create a version for Mexico connected to local inventory.
Mercado Libre. It is the largest marketplace in the country and the place where many shoppers begin their search. Their reputation metrics depend on shipping times and cancellations, so selling from abroad puts you at a disadvantage. Fulfillment companies for Mercado Libre work with their shipping deadlines to protect that reputation.
Amazon Mexico. It works similarly to Amazon in Canada, but with Mexican accounts, taxes, and logistics. A local seller account, backed by a Merchant of Record (MOR), avoids the withholding tax regime for foreigners.
TikTok Shop. Growing rapidly in beauty, personal care, and fashion, with impulse buys that demand fast delivery.
Department stores. Marketplaces like Liverpool have their own high standards and require you to operate as a Mexican supplier. If you are interested, check the steps to sell on the Liverpool marketplace before preparing your catalog.

Ideally, all these channels should share the same inventory in Mexico. This way, you avoid overselling and don't have to split stock between platforms.

Category requirements for Canadian products

The bilingual English and French labels you use in Canada do not work for Mexico. Each category must comply with its corresponding Official Mexican Standard (NOM), with information in Spanish and the importer's details. These are the Canadian categories that arrive in Mexico most frequently.

Supplements and natural products

Canada has a strong natural health product industry, regulated by Health Canada. In Mexico, many of these products are classified as dietary supplements, regulated by COFEPRIS, and cannot claim therapeutic, preventive, or curative properties. Some ingredients or dosages may cause a product to be considered a medication, which carries much stricter requirements. Before shipping, review the formulation and claims of each product with your importer, and choose an operator that understands supplement fulfillment in Mexicobecause batch and expiration date control are part of compliance.

Cosmetics and personal care

Clean and natural Canadian cosmetics are well-received in Mexico, especially through digital channels. Labeling must comply with NOM-141, including ingredients, usage instructions, and warnings in Spanish. Some claims accepted in Canada, such as certain skin benefits, may require adjustments. Review the steps for registering cosmetic products before producing labels for Mexico.

Food and beverages

Maple syrup, snacks, coffee, and other Canadian products must comply with NOM-051, which includes front-of-package warning labels when a product exceeds certain limits for sugar, fat, or sodium. Maple syrup, for example, may require labels due to its sugar content. Products of animal origin, such as seafood or meat, also have sanitary and zoosanitary import requirements that depend on the specific product.

Clothing, footwear, and outdoor gear

Clothing must comply with the NOM-004 labeling standard, which covers composition, care instructions, sizing, and country of origin, and footwear has its own specific standard. In this category, origin is decisive: many Canadian technical and outdoor clothing brands manufacture in Asia, and those items are subject to general tariffs even if shipped from Canada. Additionally, sizing and seasons in Mexico are different, with less demand for extreme cold-weather gear and more for lightweight clothing. To prepare for your operations, check what is offered by clothing and fashion fulfillment options in Mexico, where size exchanges are a major factor.

How Cubbo helps a Canadian company sell in Mexico

Up to this point, the process involves many moving parts: certificate of origin, importer of record, NOM compliance, legal seller status, tax withholdings, CFDI, warehousing, shipping carriers, and returns. Brands that struggle in Mexico usually don't fail because of their product, but because these pieces are scattered among providers that don't coordinate with each other.

Cubbo consolidates these layers into a single structure. It acts as the importer and Merchant of Record in Mexico, and also handles order fulfillment. For a Canadian company, this means that products can enter, be sold, and be delivered under a Mexican entity without having to open a local company, register with the SAT, or open local bank accounts.

What Cubbo handles as an importer

Before the first shipment, Cubbo reviews your products: applicable regulations, documentation, taxes, and category-specific requirements. For a Canadian brand, this review includes confirming which SKUs qualify as originating under the USMCA and which would be subject to general tariffs, as that difference changes the margin for each product.

Afterward, Cubbo takes over the import process. It coordinates customs clearance, pays taxes and tariffs, and processes any permits your product needs, including those from COFEPRIS when applicable. Your team in Canada provides the commercial invoice, packing list, shipping documents, and certificate of origin. The responsibilities of the importer in Mexico range from the customs entry (pedimento) to NOM compliance, so it is best that they fall to someone who knows every step.

What Cubbo handles as Merchant of Record

Once your merchandise is nationalized, Cubbo sells it through its MOR structure. It uses its Mexican tax entity to process sales, collect payments in pesos, manage VAT, and issue CFDI invoices in your brand's name. The settlement method and frequency are defined by the model you contract.

This allows you to sell on Mexican marketplaces as a local seller, without the withholding tax regime that applies to foreign entities. The model is the same one used by brands that expand their business from the United States to Mexico with a Merchant of Record, with which Canadian companies share a treaty and many import regulations.

What happens to your inventory in Mexico

Cubbo stores your inventory in its fulfillment centers in Mexico, with an ecommerce warehouse in Mexico City near the country's largest concentration of buyers, and connects it to your sales channels. It integrates with Shopify, WooCommerce, VTEX, Mercado Libre, Amazon, TikTok Shop, and Liverpool, among other platforms, and synchronizes stock so that a single inventory supplies all your channels.

Each order is picked, packed, and shipped using the most convenient carrier from over 10 options, depending on the destination, weight, and delivery time. In Mexico City, same-day delivery is available for orders placed before the cutoff time, and in the country's main markets, delivery times are around one to two days. Achieving thissame-day shipments in Mexico City depends on having inventory close to the customer, something no shipment from Canada can match.

Packaging can include your brand identity: inserts, samples, cards, and an unboxing experience designed for your customers. Returns are received in Mexico, inspected, and, when the product is in good condition, added back to available inventory instead of traveling back to Canada.

What your team in Canada keeps

Your team maintains control over the product, pricing, campaigns, content, and channel strategy. Daily execution takes place in Mexico.

Unlike European or Asian brands, the time difference works in your favor. Toronto and Montreal are one or two hours ahead of Mexico City, depending on the time of year, and Vancouver is one or two hours behind. Your team works on nearly the same schedule as the Mexican operation, making it easy to resolve questions, approve campaigns, and plan restocks on the same day.

What a typical launch looks like

Think of a skincare brand from Montreal with 30 SKUs manufactured in Quebec, which already sells in Canada and the United States and wants to test Mexico via Mercado Libre, TikTok Shop, and its Shopify store. A reasonable launch would look like this:

Product review. Tariff classification, USMCA origin verification, and label review for NOM-141 compliance.
Labeling. Spanish-language labels or supplemental labels for the 30 SKUs, including importer information.
Initial shipment. An air shipment for high-demand products and a ground shipment for base inventory, both accompanied by certificates of origin.
Customs clearance and commercial registration. Cubbo manages imports, pays duties and taxes, establishes the MOR structure, and registers accounts on marketplaces.
Operations. Inventory synchronized across channels, orders fulfilled from Mexico, and returns managed locally.

Cubbo estimates that a foreign brand can begin selling in Mexico within one to three months, depending on the product type and required permits. Categories requiring health permits, such as supplements and food, tend to fall at the longer end of that range.

Cubbo also operates in Brazil. For Canadian companies viewing Mexico as a first step into Latin America, this allows for planning a second phase with the same partner.

How much it costs to sell in Mexico with an MOR

An MOR model doesn't eliminate costs; it organizes them. Before shipping inventory, calculate your cost per order using these components:

Product cost, in Canadian dollars.
International freight and insurance, by road, air, or sea.
Tariffs, which may be zero for originating products with a valid certificate, or the general tariff for those that do not qualify.
16% import VAT, which is typically credited against sales but impacts your cash flow.
Labeling, permits, and customs clearance where applicable.
MOR service and import fees, depending on the selected plan.
Fulfillment cost per order, including receiving, storage, picking, packing, and shipping.
Marketplace and payment processing commissions.
Returns and shrinkage, with a realistic rate for your category.
Exchange rate impact between the Canadian dollar and the peso.

With these numbers, you can decide which products to bring in first and at what price to sell them. A product manufactured in Canada with zero tariffs may have a very different margin than one from the same catalog manufactured in Asia, and that calculation must be made before setting the retail price for each productin Mexico.

Also, plan your inventory by season. Sales in Mexico are concentrated around Hot Sale, Buen Fin, Mother's Day, and Christmas, and the Mexican shopping seasons do not align with Black Friday or Boxing Day in Canada. Before finalizing each restock, use a method to estimate inventory for peak seasons and avoid running out of stock during the highest-selling week.

6 common mistakes Canadian companies make when selling in Mexico

These are the most frequent mistakes made when a Canadian company starts selling in Mexico.

1. Thinking the USMCA solves everything

The trade agreement reduces tariffs, but it doesn't provide you with an RFC, issue CFDI invoices, ensure compliance with NOM standards, or prevent marketplace tax withholdings. Selling requires its own structure.

2. Assuming everything coming from Canada is originating

Products manufactured in Asia or other countries without a trade agreement with Mexico are subject to general tariffs, even if shipped from Canada. For clothing and footwear, those tariffs increased significantly in 2026.

3. Using Canadian labels

Labels in English and French do not comply with Mexican NOM standards. Prepare Spanish or supplemental labels before the merchandise reaches customs, not after.

4. Relying too long on parcel shipping

Reduced rates for shipments from Canada help with market testing, but they don't compensate for delivery times, returns, or the lack of CFDI invoices. When sales become recurring, local inventory usually wins.

5. Treating Mexico as an extension of the United States

Payment methods, seasons, marketplaces, sizing, and communication tone are all different. What works in the United States serves as a reference, but not as a template.

6. Not measuring repeat purchases

A customer who receives an order late or gets the wrong product won't come back. Measure yourretention rate over time to see if Mexico works as a recurring market and not just as a test.

When to move from a MOR to your own entity

A Merchant of Record (MOR) is the fastest way to sell in Mexico without incorporating a company, and for many Canadian businesses, it is the right structure for the first few years. It allows you to validate products, channels, and pricing with low fixed costs and no corporate obligations in Mexico.

Opening a Mexican entity starts to make sense when several conditions are met:

Sales in Mexico are now stable and represent a significant part of your business.
You need your own team in Mexico, such as sales, marketing, or customer service.
You want to sign contracts directly with stores, distributors, or marketplaces.
The cost of an MOR service exceeds what it would cost to maintain a local entity, including accounting, tax compliance, and administration.

Many brands go through both stages. They operate with an MOR while learning the market, and when the business justifies it, they open their own entity and keep the same operator for import and fulfillment. Before deciding, compare how a Importer of Record in Mexico works within each structure, because importing remains necessary in both cases.

Conclusion

Mexico is a natural choice for Canadian companies looking to diversify beyond the United States. The USMCA remains in effect, the time difference is minimal, and the Mexican e-commerce market offers large and growing channels. But the treaty only solves part of the journey: the part that happens at customs.

Selling on a recurring basis requires operating like a local. This means importing with the correct certificate of origin, complying with the NOMs for your category, charging in pesos, issuing CFDI, avoiding withholding taxes for foreign sellers, and delivering in one or two days from within Mexico. A Merchant of Record that also acts as an importer and handles fulfillment allows you to do this without opening a local entity, and leaves you the option to change your structure when your sales justify it.

Before your first shipment, review the origin of each SKU, adapt your labels, calculate your cost per order in pesos, and decide which channels you want to start with.

Frequently Asked Questions (FAQs)

What is a Merchant of Record in Mexico?

It is the entity that legally appears as the seller in every transaction in Mexico. It collects payments in pesos, issues the CFDI when required, and declares the VAT on the sale, while your brand retains control of the product, pricing, and communication.

What is the difference between an MOR and an IOR?

The Importer of Record is responsible to customs for the merchandise and pays import duties. The Merchant of Record is the legal seller to the customer and the SAT. A Canadian company that wants to sell in Mexico usually needs both functions.

Is the USMCA still in effect after the 2026 review?

Yes. In the July 1, 2026 review, there was no consensus to extend it for another 16 years, but the treaty remains in effect until 2036 and enters a stage of annual reviews. The parties can agree to an extension at any time.

Do Canadian products pay tariffs in Mexico?

Products originating from Canada with a valid certificate of origin can enter with preferential tariffs under the USMCA, often at zero. Products manufactured in countries without a trade agreement with Mexico pay the general tariff, even if they are shipped from Canada.

Can I sell in Mexico by shipping orders from Canada?

Yes, and courier imports from Canada have reduced rates when the merchandise is not subject to non-tariff regulations. However, delivery times, returns, and the lack of CFDI make inventory in Mexico more competitive when sales are recurring.

Are Canadian bilingual labels valid in Mexico?

No. English and French labels do not comply with Mexican Official Standards (NOMs). Each product must carry the information required by its specific NOM in Spanish, including the details of the importer in Mexico.

How long does it take for a Canadian company to start selling in Mexico with an MOR?

Cubbo estimates a timeframe of one to three months, depending on the product type and required permits. Categories involving health regulations, such as supplements and food, typically take longer.

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Merchant of Record in Mexico for Canadian Companies