Rising tariffs pose a significant challenge for small importers in Canada. Although small businesses may not have the financial resources of large companies, they must still serve customers and protect profit margins.

This guide offers simple strategies for small businesses tackling tariffs on a limited budget.

Why Tariffs Matter for Small Importers

Whenever you import goods into Canada, you have to pay taxes or duties on them. These taxes on goods are called tariffs. As these tariffs increase, your cost also goes up. Your business can deal with this in the following ways:

  • You may need to shrink your profits and bear the cost
  • Risk losing sales by passing it on to customers
  • Explore ways to reduce or legally avoid duties

Smart strategies are beneficial for businesses operating on limited budgets. Every bit of saving adds up.

Understand the Basics

What Triggers a Tariff

Tariffs are applied as soon as a product crosses the border. The rate of these tariffs depends on:

    • Type of product (e.g., clothing, electronics, tools)
    • Country of origin (trade deals between nations may lead to lower rates)
  • Value and quantity (Large shipments and high-value shipments often face higher tariffs)

CBSA requires payment of duties as soon as your shipment clears customs. You can hire a customs broker to handle this, and you will be invoiced afterwards.

Related Read: What Are Incoterms and How Can They Save You Money in Canada?

Common Small Business Pain Points 

1. Complex Rules and Procedures

Harmonized System (HS) codes can be complex and confusing. Using the wrong HS code triggers incorrect duties. See our example in “Cleared for Success: Total Sport Solutions”.

2. Cash Flow Crunch

Duties must be paid before you can sell any imported goods. This leads to a cash flow crunch for many small businesses.

3. High Minimums

Many carriers charge a flat fee despite the size of the order. This can eat into your margins.

4. Split Shipments

One common mistake small businesses make is breaking an order into smaller parcels. This can trigger extra fees or audits.

Five Strategies to Keep Costs Down

1. Always Verify Your HS Codes

As stated earlier, a small HS code classification mistake can double your duty bill. You can avoid this by consulting CBSA’s tariff finder or hiring a good customs broker. Accurate and verified codes mean less risk and precise duties.

2. Use De Minimis Carefully

Under Section 321, you can import up to CAD 1,600 per day duty-free. This is helpful, especially for sample shipments and e-commerce. Before you use this, watch out for:

  • Restricted items like alcohol, tobacco, or firearms
  • Avoid attempting to circumvent duties by splitting shipments

3. Explore Duty-Deferral Tools

Bonded warehouses or foreign-trade zones (FTZs) allow you to delay duties and free up cash, which is a good option for businesses with limited budgets. Learn how to maximize refunds with Canada Duty Drawbacks.

Beyond exemptions, you can also benefit from long-term cost-saving opportunities through trade agreements.

4. Leverage Trade Agreements

Deals like the Comprehensive Economic and Trade Agreement (CETA) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) allow importers to pay little or no duty. You can use these deals to your advantage if your supplier is from an eligible country. 

5. Negotiate with Suppliers

A good way to reduce tariff costs is to negotiate with your supplier. Ask if they can:

Practical Tips for Tight Budgets

  • Consolidate Shipments: Fewer, larger shipments can cut handling fees
  • Batch Your Orders: Group similar product lines under a single HS code, where applicable, to simplify customs clearance
  • Plan Ahead: Factor possible tariff hikes into your pricing
  • Automate Record-Keeping: Simple software can track duties paid and help you claim refunds

When to Seek Professional Help

Even small businesses benefit from a customs broker. A good broker can:

  • Audit your classification and paperwork
  • Alert you to new tariff changes (such as Canada’s retaliatory tariffs)
  • Help file for exemptions or remission orders

Brokers often save you more in duties and penalties than they charge in fees.

Conclusion

Rising tariffs don’t have to sink your small import business. By understanding duties and applying a few practical strategies, you can protect your margins and keep your customers happy.

Ready to simplify your imports and reduce tariff-related costs? Connect with a Clearit Canada expert today to streamline your customs clearance and maximize savings, without breaking your budget.