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Import Costs from Canada: Making Sense of Import Duties

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Estimating import costs is an important part of your business strategy. Find out what to prepare for when bringing in goods from Canada.
Natalie Kienzle
June 2, 2023
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Last Modified: September 27, 2023

Import costs from Canada can make or break your import business. Knowing these costs beforehand can save you money, but finding what they are can be a challenge. Factors such as commodity type and value come into play. With the right information, you can master the art of importing from Canada, turning challenges into opportunities for growth and success.

As per U.S. Customs and Border Protection (CBP), the basic costs of importing from Canada include duties, taxes, and brokerage fees. Imported products only being sold in the U.S. are exempt from the Goods and Services Tax (GST) or the Provincial Sales Tax (PST) applied in Canada. However, importers are still responsible for paying a Merchandise Processing Fee (MPF). 

USA Customs Clearance has spent decades helping individuals and businesses navigate the import process. Learn to make sense of the various taxes involved and avoid being surprised at the end of the process. 

The Landscape of Import Costs from Canada

Making the decision to import from Canada to the U.S. is a smart move for many businesses, and it's not just because of the shared border. Between high-quality goods and reduced shipping costs, it presents a great opportunity for people just getting started with international imports. 

Despite the similarities and friendly border situation, it’s still another country, and that means there is a price for importing. Import duties and fees are a standard part of import/export business around the word.  

Do I Have to Pay Import Fees From Canada?

Yes, U.S. importers do need to pay import fees when bringing products from Canada. Despite trade agreements that make cross border trade easier, there is a significant financial investment involved. 

While things like shipping costs less, product pricing is often comparable to U.S. costs. Making a profit means going in with the expectation of paying various import costs. 

The most common imports costs from Canada are related to:

Although these and other costs are involved, the benefits of importing from Canada can make it a worthwhile venture. 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.

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How Does the Type of Commodity Affect Import Costs?

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.

Higher value items are more likely to have higher duty rates. Before importing, it’s important to make sure that your business plan considers factors such as this when determining profit margins. 

However, the type of commodity isn’t the only factor that can impact your import costs. Keeping up international trends and political situations that could impact trade is also essential.  

Key considerations you need to keep in mind include: 

  • Supply and Demand Dynamics: The basic principle of economics applies here. If a commodity is in high demand but short supply, the price is going to go up. These increases can then bump up your import costs.
  • Currency Exchange Rates: Exchange rates between the U.S. Dollar (USD) and the Canadian Dollar (CAD) can directly impact your import costs. If the Canadian dollar strengthens against the USD, the domestic cost of your goods goes up, increasing your overall import costs.
  • Global Market Conditions: The overall economic relationship between the U.S. and Canada is mostly positive, but nothing is guaranteed. Trade disputes, such as the recent one over imported dairy products, results in additional tariffs that increase costs.

Planning for these costs isn’t easy, but very possible with the motivation and means to do so. 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.

What are the Top Canadian Exports to the US?

When it comes to popular products, some goods are traded more than others. It's important to understand these top exports, as they can often provide the best value due to established supply chains, trade agreements, and market demand.

It’s also important not to base a product decision by its performance outside the U.S. market. What a Canadian customer wants and what a U.S. consumer wants aren’t always the same. Enterprising importers may be better off looking at whole industries rather than individual commodities. 

Top Industry Imports from Canada to US 2021

IndustryAnnual Import Values
Mineral Products$110 billion
Transportation$46.5 billion
Machines$34.2 billion
Metals$34.1 billion
Chemical Products$23.7 billion
Source: OEC

Within these industries, there are a variety of products to choose from. For example, within the transportation industry, cars are the top import. However, it’s a high value commodity and might be a bigger challenge than what a new business can handle. 

New importers may be better off targeting smaller commodities within that industry instead, such as:

  • Motor vehicle parts
  • Car accessories
  • Aircraft parts
  • Vehicle bodies
  • Locomotive parts
  • Vehicle engines

Small products, including those found in other top industries, present opportunities for cost saving in some cases. Smaller, simpler products are more easily shipped across the Canadian border. 

The U.S. imports into Canada as well. Need help shipping to the Great White North? Check out our article on Canadian Customs Brokerage.

Import costs from Canada, road signs indicating directions to US or Canada.

How Can Understanding Canada’s Top Exports Minimize Import Costs?

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. 

Let's consider a couple of examples from the list of top Canadian exports:

  • Vehicles and Auto Parts: As mentioned, these are traded in large volumes. Thanks to trade agreements, certain vehicles and parts manufactured in Canada can be imported duty-free. 
  • Agricultural Products: Many Canadian agricultural products can be imported duty-free as well. Plus, the supply chains for these products are well established, which can reduce logistical costs.  

However, not all top exports are a good fit. Some can be more challenging and have costly import requirements:

  • Crude Oil: While it's a top export, importing crude oil can be complex and costly due to the specific equipment and infrastructure needed for transport. Plus, oil is subject to wildly changing global market prices.
  • Machinery and Equipment: The import duties and regulations for machinery can be complex, as they often depend on the specific type of equipment, its intended use, and its country of origin. You may end up importing something made from parts from outside Canada. 

For new importers, it's often best to start with less complex commodities. Here are a couple to consider:

  • Forestry Products: Importing forestry products, like timber, can be a simpler option for new importers. The supply chain is straightforward, and the import regulations are generally less complex than for other commodities.
  • Specific Agricultural Products: Products like wheat or apples can be a good starting point for new importers. They have the advantage of being in high demand, and the import process is fairly straightforward.

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. 

Paying Import Duties from Canada to US

While paying import duties does cut into your bottom line, it's just part of the process. Many duties protect domestic industries and generate revenue for the government. There are straightforward ways to arrange these payments, and professional assistance is available to guide you through it.

Here's a simple breakdown:

  1. Find a Customs Broker: Importers work with licensed customs brokers that can help accurately calculate customs duties, ensure the goods are correctly classified under the HTS code system, and arrange the payments.
  2. Total Calculations: The final amount owed is calculated based on the value of the goods and their specific HTS code. It's important to get this right, because the wrong classification can lead to overpayment or potential penalties worth thousands of dollars.
  3. Payment Submission: The CBP accepts payments for duties and fees through the Automated Clearing House (ACH), which is an electronic payment option. A brokerage service can make sure that all payments go through in the right amounts.  

Look for a brokerage house familiar with Canadian imports. These agencies are more familiar with specific import fees and trade agreements between the two nations. If you need help with shipping, they may also be able to connect you with a freight forwarding service that ships to and from Canada.

As a 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. 

Freight train and cars with Canadian Rockies on the background.

Strategies for Reducing Import Duties

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 between it and the United States. Primary among these is the United States Mexico Canada Free Trade Agreement (USMCA)

United States-Mexico-Canada Agreement (USMCA)

Formerly known as the North American Free Trade Agreement (NAFTA), the USMCA came into effect in 2020. Its creation improved the import process between the U.S. and Canada by modernizing provisions and reducing different trade barriers.

Among the different provisions that U.S. importers can benefit from are:

  • Lower de minimis shipment values
  • Reciprocal duty-free market access
  • Digital trade provisions
  • Well-defined criteria to minimize classification errors

By choosing imports that are largely protected from harsh imports fees, businesses can save thousands of dollars. This also means staying within certain tariff rates quotas (TRQs). So long as the quantities imported are below a certain quantity, products can come in duty-free or with reduced taxes. 

Products importers may wish to avoid when strategizing for cost savings include:

  • Poultry and egg products
  • Dairy products
  • Softwood lumber
  • Fish and seafood
  • Tobacco products
  • Alcohol

While not impossible to import, these commodities will result in greater expenses on the part of the importer. 

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Do US Importers Pay Canadian Sales Tax?

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.

Imports from Canada Made Possible With USA Customs Clearance

As we've discussed how to manage import costs from Canada, it's clear that understanding and effectively handling these costs is necessary for a successful importing journey. 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 of 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 a 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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One comment on “Import Costs from Canada: Making Sense of Import Duties”

  1. I am considering the purchase of a 1976 Cessna 177B aircraft based in Hawksbury, Ontario and understand that importing and aircraft into the US from Canada is somewhat complicated. I am interested in learning whether your firm handles such transactions.

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