U.S. Tariffs: How Canadian eCommerce Businesses Can Respond to New Trade Realities
For decades, free trade agreements have shaped cross-border trade between Canada and the United States. The North American Free Trade Agreement (NAFTA) and its successor, the United States-Mexico-Canada Agreement (USMCA), allowed corporations to trade goods with low tariffs, promoting economic integration.
However, recent governmental policy proposals may change the scenario. The United States government’s recent imposition of 25% tariffs on some Canadian goods represents a substantial shift in cross-border trade relations.
These tariffs target industries such as steel, aluminium, and manufactured goods. While a 30-day halt on proposed tariffs for Canada has been announced, giving temporary relief in addition to broader tariff increases, duty-free exemptions are under renewed examination, bringing challenges as well as opportunities to Canadian eCommerce businesses. These changes could result in greater prices and smaller profit margins for Canadian businesses exporting to the United States, making adapting more important than ever.
As potential tariff changes increase, exploring how to handle these new trade realities becomes critical. This article discusses techniques for Canadian exporters to adapt to changing trade situations, expand globally, and optimize cross-border trading.
Read more:
Shift From In-House To Outsourced Fulfillment – When it’s Better & How to Do it Right
How Third-party Logistics Services Can Ensure E-Commerce Growth?
The Top 6 Reasons For Outsourcing in Supply Chain Management For Your eCommerce Business
SPExpress is a trusted fulfillment partner that delivers seamless multichannel order fulfillment services to leading brands. Contact our team today to learn how we can help you optimize your hybrid fulfillment strategy.
At SPExpress, we offer efficiency, scalability, and comprehensive shipping and warehousing solutions to businesses of any size, easing the burden on businesses. Get in touch with us right now to find out how our fulfillment and warehousing services may help your company. Contact us today to learn how we can assist you with your inventory management and order fulfillment strategies. Together with our experts, you can start on the path to reliable and efficient inventory management right now.
U.S. Tariffs: How Canadian eCommerce Businesses Can Respond to New Trade Realities
Understanding the Impact of Tariffs on Canadian eCommerce
Canadian eCommerce businesses shipping to the United States now face a 25% cost increase on tariff-affected items. For example, a $100 product now incurs a $25 duty, forcing merchants to either absorb losses or raise prices—a risky move in competitive markets like Amazon. Price-conscious Americans might drop their purchases if Canadian sellers pass on tariff costs directly to their customers.
On the other hand, the tariffs broadly impact raw materials, and finished goods like automotive parts, machinery, and consumer electronics face the steepest cost increases. Canadian brands that sell fashion, home goods, or specialist products in the United States will see profit margins shrink unless they change their pricing or sourcing strategy.
For example, U.S. tariffs of 30% on top of duties already in place for China as high as 30% on goods sourced from China, and changes to the duty-free status of certain products under Section 321 of the US Tariff Act pose significant challenges to Canadian businesses. These shifts could tighten margins and increase costs for exporters, necessitating a strategic response to maintain competitiveness. Many Canadian brands also rely on U.S. fulfillment centres for fast shipping. Tariffs on warehousing and logistics services may also create renegotiations or the relocation of inventory hubs.
SPExpress is a trusted fulfillment partner that delivers seamless multichannel order fulfillment services to leading brands. Contact our team today to learn how we can help you optimize your hybrid fulfillment strategy.
At SPExpress, we offer efficiency, scalability, and comprehensive shipping and warehousing solutions to businesses of any size, easing the burden on businesses. Get in touch with us right now to find out how our fulfillment and warehousing services may help your company. Contact us today to learn how we can assist you with your inventory management and order fulfillment strategies. Together with our experts, you can start on the path to reliable and efficient inventory management right now.
Strategies to Navigate the New Trade Landscape
For decades, the US has been the primary export destination for Canadian businesses, absorbing a significant portion of exports. However, Canadian businesses face increased risks due to their concentration in a single market as trade regulations change. To reduce the impact of U.S. tariffs, Canadian e-commerce businesses can adopt the following strategies:
Diversify Supply Chains
The reliance on US suppliers raises exposure to tariffs. Businesses should consider alternate procurement options, such as domestic suppliers or partners in countries unaffected by US tariffs. This diversification can lessen reliance on a single market while increasing supply chain resilience.
For example, Canadian e-commerce companies can collaborate with U.S. manufacturers to obtain tariff-free components and source packaging materials domestically. Canadian suppliers may now be more competitive. Even if their prices were once higher than U.S. alternatives, the tariff may have levelled the playing field.
Map and Analyze Supply Chains
You can’t manage what you can’t see. Many businesses operate with fragmented knowledge of their supply chains, especially if they rely on multiple third-party suppliers and manufacturers. Tariffs hit at specific points — materials, components, or finished goods — and understanding exactly where is key to adaptation.
Creating a detailed supply chain map allows you to discover potential risks and opportunities for improvement. Understanding the flow of goods enables organizations to identify stages where costs are rising because of tariffs and find alternatives.
Optimize Logistics and Fulfillment
Efficient logistics are crucial for maintaining profitability. Businesses should evaluate their fulfillment strategy, including regional warehouses and third-party logistics suppliers, to cut shipment times and costs. For example, use in-house fulfillment for local orders and 3PLs for worldwide shipments. This provides flexibility and risk buffering.
On the other hand, using technology for inventory management and route optimization can increase efficiency. Optimizing logistics guarantees that you avoid losing money due to inefficiencies or late delivery, which result in chargebacks and refunds.
Adjust Pricing Strategies
Transparent communication with customers regarding tariff-related price adjustments can help to maintain trust. Some businesses have begun marking tariff-related charges on receipts to help explain pricing rises. For example, some businesses in the United States are adding “Tariff Adjustment Fees” as a line item on invoices to explain pricing increases. Consider this tactic if your brand tone allows it.
Furthermore, investigating dynamic pricing strategies may help in balancing competition with profitability. Instead of just raising your costs, consider what your product means to the customer. You might be able to charge more with the right positioning.
Focus on Domestic and Alternative Markets
Shifting the focus to domestic markets or countries with favourable trade agreements can lead to new potential customers. By expanding into markets less affected by U.S. tariffs, businesses can reduce exposure to trade-related risks.
Exploring new markets can help reduce dependency on a single economy while also opening up new income and growth opportunities. For example, target Canadian buyers who may swiftly prefer domestic products to avoid cross-border delays and taxes. Diversification is now seen as a strategic essential, not just for risk management, but also for capitalizing on rising market growth opportunities.
The U.S. tariff stacking policy has thrown an issue into what was already a complex e-commerce supply environment. But Canadian businesses have options. Through smart supply chain mapping, diversification, pricing discipline, and market shifts, it’s possible to not only survive but also gain an advantage over competitors who fail to adapt. Proactive adaptation and strategic planning are essential to maintain profitability and competitiveness in the evolving landscape of international trade.
Read more:
Shift From In-House To Outsourced Fulfillment – When it’s Better & How to Do it Right
How Third-party Logistics Services Can Ensure E-Commerce Growth?
The Top 6 Reasons For Outsourcing in Supply Chain Management For Your eCommerce Business
SPExpress is a trusted fulfillment partner that delivers seamless multichannel order fulfillment services to leading brands. Contact our team today to learn how we can help you optimize your hybrid fulfillment strategy.
SPExpress is committed to supporting your order fulfillment needs, regardless of the size of your online store. Our expertise and resources can help you optimize your order fulfillment strategy and achieve your business goals.
At SPExpress, we offer efficiency, scalability, and comprehensive shipping and warehousing solutions to businesses of any size, easing the burden on businesses. Get in touch with us right now to find out how our fulfillment and warehousing services may help your company. Don’t let inventory problems ruin your company; work with us to find dependable, effective solutions that give you more control. We are ready to take your order fulfillment game to new levels.
Contact us today to learn how we can assist you with your inventory management and order fulfillment strategies. Together with our experts, you can start on the path to reliable and efficient inventory management right now.