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The main costs involved when importing or shipping from Canada are the duties and taxes, permit applications, and brokerage fees.
Key Takeaways:
USA Customs Clearance has customs brokers licensed in both the United States and Canada that can help importers and exporters on either side of the border.
Yes, U.S. importers do need to pay import duties and taxes when bringing products from Canada. Trade agreements do make cross border trade easier, and in some cases allow for duty-free products, but it doesn’t apply to everything.
This is important because product pricing is often comparable to U.S. costs, even if things like shipping are easier to arrange. Making a profit means taking all related costs into consideration.
The most common imports costs from Canada are related to:
With some careful planning and the right guidance, you can handle these costs and make the most of the opportunities that cross border trade presents.
Our Expert Customs Consultants Will Personally Guide You.
Not all goods are created equal, especially when it comes to import costs. The type of commodity you're importing plays a big role in the fees you’ll need to prepare for. Import duties are determined by the Harmonized Tariff System (HTS) code applied to every commodity entering the country.
For calculating the fees between the U.S. and Canada specifically, you’ll also need to reference the United States-Mexico-Canada-Trade Agreement (USMCA). A number of items are still subject to import tax. I’ve gathered a list of the more common ones along with a range of base tariff rates.
Source: U.S. Trade Representative
When you’re looking at the base rate, keep in mind that these are estimates based on the wide variety of products in those general categories. The above is only a small sample of the possibilities. These are presented based on weight, but for certain liquid commodities, the range can be based on volume in liters.
At times, the price per kilogram is all you’ll need to cover. Other times it will be that weight plus a percentage of the overall value. I’ve provided you with the highest possible percentage you’re likely to need to pay within each category as applicable.
Products in the dairy category, like various cheeses, are also subject to tariff rate quotas. These require special permits issued by the U.S. Department of Agriculture and limit the amount of products that can be imported.
If you go above your assigned limit, there is a drastically increased import tariff added to everything over the limit. If you’re not careful, going even a little bit over will cancel out any profit you would have made.
The type of commodity isn’t the only factor affecting the costs. Any number of international trends and political situations can cause changes.
Key considerations to keep in mind include:
Planning for these costs isn’t easy, but it is possible. The more you know, the higher the chance of making good decisions, and the more successful your importing business can be. Remember, in international trade, knowledge truly is power.
As a general rule, U.S. importers do not pay Goods and Services Tax (GST) or Provincial Sales Tax (PST) in Canada on goods they are importing into the United States. Another type of sales tax, referred to as the Harmonized Sales Tax (HST), is treated the same way.
While GST/HST technically applies, the rate is set to zero, so no tax is actually charged. This is based on the principle that consumption taxes should apply only in the jurisdiction where goods and services are consumed.
The exceptions to this rule generally involve imported goods that might have been used in Canada before being exported, such as a used car. Others involve the import of energy sources.
It's important to note that the specifics vary greatly. Always consult with a tax professional or licensed customs broker for advice about your specific circumstances.
While paying import taxes does cut into your bottom line, it's just part of the process. After all, there is usually more to your business than just getting the goods through customs.
We’re talking about the costs related to:
Depending on where along the supply chain your business operates, your shipping expenses can include getting goods both across a border and delivering them to clients.
Even experienced importers will often work with licensed customs brokers because of their ability to manage a variety of processes. Among other things, brokers can:
You aren’t legally required to use the services of a customs broker whether you’re operating out of the United States or Canada. Choosing the DIY approach, however, has landed many a new importer in hot water with the CBP.
Wrong HTS code? Say hello to a reclassification fee. Document errors causing a delay at the border crossing? You’ll need to pay for additional storage time, document resubmission, and possibly a CBP inspection fee.
In the end, it’s usually more cost-effective to hire a professional.
As both a CBP-Licensed Customs Broker and a Qualified Canadian Customs Broker, USA Customs Clearance can seamlessly facilitate your imports and simplify costs between the U.S. and Canada.
These can be difficult to calculate because each agency within the U.S. that oversees an imported product has their own fee schedule.
As an example, we’ll focus on two Canadian commodities that require permitting, dairy and lumber.
Both the permits for dairy and lumber are to be renewed annually. These are just two examples. There are hundreds of goods that pass between the U.S. and Canada, all subject to a variety of partner government agencies (PGAs) that would love to catch you making a mistake.
If you’ve hired a customs broker, they can handle most necessary documentation on your behalf. Most, if not all, have access to the online submission systems like the Automated Clearing House (ACH) and others.
Other documents often required include:
There are fees related to each of these documents, either directly to the issuing agency or as set by the brokerage firm assisting you with importing.
I’ve grouped up the various other transport-related services here to keep things simple. In this case, domestic logistics costs include shipping, warehousing, and possibly packaging.
These can technically be handled by separate entities, but let’s be honest, who wants to keep track of that many companies? Therefore, when calculating your final landed costs, include the costs of hiring a reliable third party logistics company (3PL).
A 3PL often serves multiple channels in the logistics industry, including shipping and warehousing. In many cases, they can help with many of the needs we’ve already discussed.
USA Customs Clearance can actually help you with several of these, as we have an established relationship with R+L Global Logistics, a nationwide 3PL provider.
A big part of saving on import costs from any nation involves complying with regulations and working with an experienced customs broker.
In the case of goods from Canada, importers also benefit from the various trade agreements that have been brokered with the United States. Primary among these is the United States Mexico Canada Free Trade Agreement (USMCA).
The current Free Trade Agreement benefiting U.S./Canada trade is the 2020 USMCA, formerly known as the North American Free Trade Agreement (NAFTA). Its creation improved the import process between the participating nations by modernizing provisions and reducing different trade barriers.
By choosing imports that are largely protected from harsh import fees, businesses can save thousands of dollars.
Knowledge about Canada’s top exports can give you a competitive edge in minimizing import costs. Commodities that are traded in high volume often have established supply chains, which can reduce shipping and handling costs. Plus, high-volume commodities are more likely to have specific trade agreements in place, which can lower tax and duty rates.
Consider the following:
However, not all top exports are a good fit. Some can be more challenging and have costly import requirements:
Understanding the pros and cons of different commodities can help you find good opportunities when looking for import ideas. This will help you minimize certain costs and grow your import business in stages.
Receive Personalized Assistance for Regulated Commodities.
A clear understanding of the costs associated with importing from Canada, or any other country, makes for easier business planning. Yet, it's equally clear that this process is also complex and time-consuming. That's where we come in.
At USA Customs Clearance, we're dedicated to simplifying your importing process. Our services are designed to empower you to navigate import costs with confidence, giving you more time to focus on what truly matters – your business.
Don't let the complexities involved in import costs keep you from maximizing your business potential. With USA Customs Clearance by your side, you can turn these challenges into success stories.
As both a CBP-Licensed Customs Broker and a Qualified Canadian Customs Broker, we can seamlessly facilitate your imports and simplify costs between the U.S. and Canada. Give us a call at (855) 912-0406 for a risk-free brokerage services quote. Let's turn your importing journey into a smooth and successful venture, together.
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