Managing Cross-Border Tariffs: What You Need to Know & How to Navigate the Challenges

How to Tackle Tariffs in Your Cross-Border Shipping Between the US and Canada (And Beyond)

Cross-border selling presents tremendous growth opportunities, particularly between the United States and Canada. However, it also comes with its own set of challenges, especially when it comes to tariffs. As someone who ships over 100 packages internationally each week, I can truly relate to the difficulties you’re facing. I’m right there with you, continuously researching and adjusting as things evolve. Whether you’re selling physical products or managing a supply chain that crosses borders, you’ll need to understand how tariffs and other international shipping costs affect your business and your customers.

In this post, we’ll explore the challenges and solutions related to cross-border tariffs, specifically between the US and Canada, and how these rules impact your pricing, customer experience, and overall supply chain. Whether you’re just starting to sell internationally or have been doing it for years, understanding how to navigate tariffs will help you stay competitive and avoid unexpected costs.

What Are Tariffs and How Do They Impact Your Cross-Border Business?

A tariff is essentially a tax on imports and exports between countries. For businesses operating across borders, tariffs impact the cost of goods sold, shipping rates, and even the pricing structure of the products you offer to your customers. They can create hurdles in the supply chain and complicate your profit margins, especially when you're dealing with cross-border shipping between countries like the US and Canada.

Here’s what you need to know about how tariffs affect your business:

Customs Duties: Customs duties are often the most significant tariff-related charge. These are taxes imposed by the government of the destination country when goods enter. The amount of duty you’ll pay depends on the harmonization code (more on this later) and the country’s tariff policies.
Harmonization Code: Each product has a Harmonized System (HS) code, which is used internationally to classify products for tariff purposes. This code determines how much tax will be applied when crossing borders. Unfortunately, it can be a bit of a guessing game, and charges may vary depending on which agent or customs officer is reviewing the goods.
Shipping Fees: In addition to tariffs, cross-border shipping incurs fees, which can vary depending on whether the items are coming into or leaving the country. Shipping services like GlobalPostGo offer a way to simplify this, but it still requires careful attention to avoid unnecessary expenses.

Managing Cross-Border Tariffs: What You Need to Know & How to Navigate the Challenges

Managing Tariffs: How Can You Mitigate the Impact?

When it comes to managing tariffs in your cross-border business, understanding your options and creating a strategy is key to preventing tariff-related costs from cutting into your profits.

1. Leverage Lower-Value Exemptions:

One potential solution is taking advantage of lower-value exemptions, which can allow you to avoid tariffs if the value of the goods you’re selling falls below a certain threshold. For example:

Canada: Shipments valued at under $200 USD and weighing under 2lbs are often exempt from some tariffs when shipped via GlobalPostGo, a service that charges a flat fee of $27.95 with taxes included. This service works not only for shipments to Canada but also for Australia, New Zealand, and Hong Kong. If you’re regularly shipping small packages, this can be a game-changer in terms of both cost-effectiveness and ease.
Other Services: For larger or heavier orders, the tariffs will likely be determined based on the harmonization code and weight. However, this is where things get complicated because customs procedures and tariff charges can vary widely depending on the location and customs agent. Some shipments may pass through with little to no charges, while others may incur unexpected fees.

2. Know Your Harmonization Code:

To avoid unpredictable costs and ensure you’re calculating your shipping fees correctly, it’s vital to understand how the harmonization code works. Every product falls into a category with a specific code, which will determine the tariff rates applied to your products when they cross borders.

Accuracy Matters: The key is accuracy—the correct harmonization code will ensure you’re not overcharged and help your shipments clear customs faster. Incorrectly classified products can result in higher duties, fines, and delays.
Get Help if You’re Unsure: If you're uncertain about your product's harmonization code, consider seeking help from a customs broker or using services that provide tariff guidance. This can ensure your product classification is correct and save you from unexpected charges down the line.

3. Negotiate with Your Shipping Providers:

Some shipping providers offer customized solutions for businesses looking to regularly ship across borders. If you’re consistently dealing with high volumes of cross-border shipments, consider negotiating with your shipping partners to secure better rates or tariff management solutions.

Some providers will offer flat rates, and others might have specific partnership programs that help lower your overall tariff expenses, especially if you are shipping to multiple countries regularly. Trust me (and I speak from experience), there is nothing worse than a $1700 adjustment to your UPS or FedEx bill!

4. Consider Warehousing in Canada or the US:

For businesses that regularly ship cross-border, it may be worth considering warehousing in Canada or the US, depending on your primary market. By using a third-party logistics (3PL) provider in either country, you can reduce the frequency of cross-border shipments and potentially avoid certain tariffs altogether.

Example: If you have a significant customer base in Canada, consider working with a 3PL provider in Canada to store and fulfill orders domestically. This can reduce both shipping and tariff costs, particularly for larger items that would otherwise be subject to hefty duties when crossing the border.

5. Use a Freight Forwarder to Simplify Tariff Management:

If managing tariffs is overwhelming, another option is to work with a freight forwarder. These professionals handle the logistics of shipping, including dealing with tariffs, customs, and other regulations. They can help streamline the process and potentially save you money by negotiating better rates and making sure you comply with all regulations.

If You Feel Insulated from Tariffs: How Did You Do It?

Some businesses have found ways to insulate themselves from the challenges of tariffs, whether through efficient supply chain strategies, warehousing solutions, or better agreements with suppliers. If you're one of these businesses, we’d love to hear your experience!

Have you found a specific shipping strategy that minimizes the impact of tariffs?
Are you working with a certain freight forwarder or customs broker that helps streamline the process?
Are you storing goods in a way that minimizes cross-border shipment frequency?

Sharing your insights could help others facing similar challenges, and opening up the conversation around tariffs could foster a collaborative approach to problem-solving in our community.

Navigating Cross-Border Tariffs with Care

Dealing with cross-border tariffs and customs duties doesn’t have to be a nightmare—but it requires careful planning and strategy. Whether you're shipping small products under $200 with services like GlobalPostGo, negotiating shipping rates with partners, or utilizing warehousing to reduce cross-border shipments, there are ways to mitigate the costs and streamline your process.

As this issue impacts many of us in the wholesale and eCommerce space, it’s important to share knowledge, ask questions, and support each other. If you have experience with tariffs, cross-border logistics, or creative solutions, let us know! The goal is to find the best ways to reduce costs, maintain efficiency, and ensure your customers get the best experience possible, no matter the country they’re in.

Key Takeaways:

GlobalPostGo offers affordable shipping for smaller packages to Canada, Australia, New Zealand, and Hong Kong (under $200 and 2lbs).
Tariffs are determined by the harmonization code, so accurate product classification is essential to avoid overpaying.
Negotiating with shipping providers, using warehousing options, and working with a freight forwarder can help reduce the impact of tariffs on your business.
Share your experiences and solutions—this is a real issue that we can all learn from!