Selling via B2C e-commerce channels to the U.S. market: A guide on shipping and logistics

Overview and Introduction

E-commerce is an easy way to scale up your business and reach new customers in the United States. Whether you are selling direct to consumers (B2C) via your website, or using an online marketplace fulfillment center, warehousing service and/or a third-party in-country distributor, this Guide will help answer questions and point to helpful resources to assist with the necessary preparation and logistics considerations to help Canadian small and medium-sized businesses get Canadian products into U.S. customers’ hands.

E-commerce shipments from foreign countries, including Canada, are coming in greater volume across U.S. borders in part due to:

• ease in setting up e-commerce shops/portals by foreign sellers;
• increased popularity of this sales channel for U.S. consumers; and
• the relatively high value thresholds in which products may enter the United States via streamlined customs entry processes.

U.S. Customs and Border Protection (CBP) reports that “Since 2000, the number of Americans shopping online has increased nearly four-fold, from 22% to 79%. This rise in e-commerce has led to a massive increase in shipments valued under $2,500, affecting sea, rail, and land ports of entry. By the end of Fiscal Year 2017, one express hub saw a 1,000% increase in shipments over 20 years, primarily small shipments."

Role of U.S. Customs and Border Protection and other agencies at the U.S. border

CBP has dual responsibilities to facilitate legitimate trade into the United States as well as enforce customs regulations at the U.S. border. To meet challenges of e-commerce cross-border trade, CBP developed its “E-Commerce Strategy” in 2018, which turns on four primary goals:

1. Goal 1: Enhance legal and regulatory authorities to better posture CBP and interagency partners to address emerging threats
2. Goal 2: Enhance and adapt all affected CBP operations to respond to emerging supply chain dynamics created by the rapid growth of e-commerce
3. Goal 3: Drive private sector compliance through enforcement resources and incentives
4. Goal 4: Facilitate international trade standards for e-commerce to support economic prosperity

CBP has worked to provide guides and resources, as have other partner government agencies (PGAs) in the United States, to ensure exporters understand the benefits and responsibilities of sending products via e-commerce channels.

Role and responsibilities of the Canadian exporter

This Guide provides many resources to enable a Canadian exporter to comply with U.S. import requirements when shipping via e-commerce channels.

It is important to note that in many cases, CBP considers the Canadian exporter to also be the “importer of record” or “IOR” in the United States.^{Footnote 1} CBP outlines that the IOR is responsible for using “reasonable care to enter, classify and determine the value of imported merchandise and to provide any other information necessary to enable CBP to properly assess duties, collect accurate statistics, and determine whether other applicable legal requirements, if any, have been met.” This Guide covers the many topics to facilitate reasonable care in shipping products to the United States and enable a Canadian exporter to undertake informed compliance with CBP’s laws and regulations. See Section I.D for more information.

Format of the guide

The Guide has been separated into various sections on key areas for consideration. Information has been compiled from government and private sector sources in the United States and Canada.

Users can jump to sections via the hyperlinks below.

1. Pre-shipment Planning
   1. Learn if any Registrations are Required
   2. Determine Appropriate Distribution Channel
   3. Protect your Intellectual Property
   4. Exercise Reasonable Care and Informed Compliance
   5. Understand Regulatory Requirements
   6. Comply with Labeling Requirements
   7. Prepare Documentation
   8. Know if Tariffs, Taxes and Fees Apply
2. Sending Products to the United States
   1. Shipping Considerations
   2. Potential Issues at the Border
   3. Logistics of Returns
3. Resources and References
   1. Export Scenarios
   2. Exporter checklists
   3. Common Mistakes to Avoid
   4. Definitions used in the Guide
   5. Relevant Agencies in U.S. and Canada
   6. Relevant Government Regulations and Guidance
   7. Publications and Guides

Part I: pre-shipment planning

Your e-commerce sales channel is up and running. Customers in the United States are interested in your product. Now what?

In this section, we answer questions to help with pre-shipment planning and considerations. Taking the time to do some upfront legwork prior to shipping to the United States will help facilitate smoother process and avoid delays at the U.S. border. Specifically, we will cover the following topics:

1. Learn about registration requirements in Canada and/or the United States
2. Explore distribution channel options and considerations
3. Protect your intellectual property (IP)
4. Exercise reasonable care and informed compliance
5. Understand regulatory requirements
6. Comply with labeling requirements
7. Prepare relevant documentation
8. Know if tariffs, taxes and/or other fees apply

A. Understand registration requirements

Do I need to register as a Canadian exporter?

In Canada, every exporter is required to obtain a business number (BN) account designated for export or import/export. See CBSA’s Export Guide for more information on the process.

In the United States, there is no requirement for foreign exporters to register with CBP, unless they are also acting as the “importer of record” in the United States.  See Question 4 below for more information.

Do I need to register or open a U.S. company to ship and sell my goods from Canada to the United States?

No. If you are simply shipping your goods direct to consumers or to have another company fulfill them (for instance, Amazon Fulfilled by Amazon (FBA) or other warehouses) you do not need to have a U.S. company.

The need to have a U.S. company starts to become an issue if you want to have a physical presence (warehouse, office), work in the United States or employ people there.  In this case, a tax ID, such as Employer Identification Number may be required.  Canada’s Trade Commissioner Service with offices located throughout the United States can help Canadian companies that may require assistance with opening a company in the United States.

Do I need to register my product or Canadian manufacturing facility in the United States?

Certain goods regulated by the U.S. Food and Drug Administration (FDA) may require product or facility registration such as food, cosmetics, drugs, and medical devices. See FDA’s Registration and Listing page.

For food facilities, see FDA’s Food Facility Registration requirements and FDA’s Small Entity Compliance Guide for Registration of Food Facilities.

Most other products and foreign manufacturing facilities do not require registration in the United States.

Are there instances in which I – as the Canadian exporter -- need to register as the importer in the United States?

Yes. If shipping directly to your consumer, a fulfillment center/network of an online marketplace like Amazon, Walmart or Shopify, or a third-party logistic warehouse or a bonded warehouse in the United States, Canadian exporters will be required by CBP to act as the “importer of record” (also known as the “IOR”) in the United States.^{Footnote 2}  The IOR is the person or entity who actually has ownership of the imported goods at the time of import, has the legal responsibility to ensure products comply with U.S. importing requirements, and pays any tariffs to CBP.

In addition, any individual or organization involved as a consignee, ultimate consignee, sold to party will be required to register as an IOR.

An IOR requires an importer number. Canadian exporters that will be acting as the IOR may request a CBP-assigned importer number by completing CBP Form 5106. Express courier services such as DHL, FedEx, UPS, etc. and licensed U.S. customs brokers may also request this form be filled out. According to CBP it typically takes two days to input and activate a new IOR.

As of March 2021, CBP Form 5106 was under review; however, the U.S. Office of Management and Budget (OMB) has instructed the form is still valid for use. Please see the CBP Form 5106 website for information on future updates to import registration procedure and additional resources such as webinars and FAQs. Contact for questions: 5106@cbp.dhs.gov.

Helpful tip: A Canadian exporter can – and may be required to -- act as an importer of record (IOR). Customs broker in the U.S. can help facilitate obtaining Foreign Customs Assigned Number.

Be aware:Amazon (FBA), Walmart Marketplace, Shopify and other fulfillment centers of online marketplaces will refuse your shipment if you name them as the “importer of record” or leave the “importer of record” line empty.

B. Explore distribution channel options and considerations

What are my options in terms of distribution channels to get my products to customers in the United States?  Which one is best for my company?

Various distribution channels exist for e-commerce sellers from direct-to-consumer shipments, to using various providers to assist with transportation, storage, distribution, or even paying any duties and/or taxes. Below is a description of the different distribution options followed by a table to compare services and considerations.

Fulfillment centers/warehouse managed by e-commerce marketplaces: a service provided by e-commerce marketplaces to help e-commerce sellers outsource warehousing in the United States and then shipping to buyers domestically. Fulfillment centers do not take ownership of your products; rather, they act as a warehouse and delivery service for the products in the United States. They may provide other services as well. Examples of fulfillment centers include: Fulfillment by Amazon (FBA), Walmart Marketplace, Shopify Fulfillment Network, and Rakuten Super Logistics.

Helpful tip: Some e-commerce marketplaces offer fulfillment warehousing services located in Canada which is separate from fulfillment warehousing services located in the United States. As an example, Amazon offers two options:

• Fulfillment by Amazon/FBA in which products are warehoused in the U.S. and available via Amazon.com, and
• Fulfillment by Amazon Export/FBA Export in which products are housed in Canada and available via Amazon.ca. 

Third-party logistics (3PL): a 3PL provider provides a range of logistics services including transportation, warehousing, and fulfillment services. They do not take ownership of your products in the United States. Examples of 3PL service providers include: FedEx, DHL, C.H. Robinson, XPO Logistics, J.B. Hunt, ShipBob, and ShipMonk.

Helpful tip: If you export only to a specific region of the United States, you may consider using a regional 3PL provider. While global or national 3PLs offer a wide array of services, regional 3PLs may be able to provide tailored assistance towards your company's needs. Typically, smaller, regional 3PLs are able to provide a greater focus on each client and are more familiar with specific routes in a region. Depending on your business model, it is critical to evaluate different services that 3PLs offer to determine what is best for your business.

Distributor: Distributors purchase your product to resell to U.S. customers. They take ownership of your products in the United States.

U.S. bonded warehouse: a bonded warehouse is supervised by CBP and usually located by the ports of entry. Customs clearance and duty/tax obligation is deferred until a sale is made in the United States.

Other warehouse services: other private warehouse services may provide more general inventory service in any U.S. location that may suit your needs.

Depending on the distribution channel you choose, there may be logistics and cost implications. Below is general guidance and comparison of the services for the exporter/seller’s consideration.

E-commerce distribution channel

C. Protect your intellectual property (IP)

What is intellectual property and how do I know if I own IP?

According to the World Intellectual Property Organization, intellectual property (IP) refers to “creations of the mind – everything from works of art to inventions, computer programs to trademarks and other commercial signs.”

See the Canadian Intellectual Property Office’s guide on “Doing business abroad: Protecting your IP in the United States,” which provides insights on protecting trademarks, copyrights, and patents.

CBP has the authority to detain, seize, forfeit, and ultimately destroy merchandise seeking entry into the United States if it bears an infringing trademark or copyright that has been registered with the U.S. Patent and Trademark Office (USPTO) or the U.S. Copyright Office (USCO) and has subsequently been recorded with CBP.

I have registered my IP in Canada. Do I also need to register my IP in the United States?  If so, how do I apply for IP protection in the United States?

Yes. A Canadian patent, trademark or industrial design does not secure your rights outside of Canada. You should consider obtaining IP protection in the countries where you plan on doing business, including selling products over the Internet and/or manufacturing products overseas. For the most part, the protection and registration process for IP in the U.S. is similar to that in Canada.

In the United States, you can apply for trademark, patent and copyright protection. The USPTO is the U.S. federal agency responsible for granting patents and registering trademarks. Copyright registration is administered by the USCO.

Applications for patents and trademarks can be filed electronically, and copyright applications can be filed at copyright.gov. Both organizations' websites also have online searchable databases. A good first step is to search existing IP to check whether your anticipated IP use may conflict with or infringe on someone's prior rights. Many Canadian IP professionals are qualified as IP agents in the United States and can also help you protect and file your IP applications.

Helpful tip: IP rights are important—take the time to identify your IP to determine what can be registered and/or enforced. See more in the “Doing business abroad: Protecting your IP in the United States” guide by the Canadian Intellectual Property Office.

Be aware: CBP enforces IP rights at the border. Make sure you are not violating IP rights in shipping products to the United States. See CBP’s guide: “E-Commerce: The Price of Importing Counterfeit Goods”.

I understand the CUSMA/USMCA has a chapter on Intellectual Property Rights. Do I still need to apply for IP protection since the agreement has new provisions?

Yes. CUSMA/USMCA establishes a legal framework of minimum standards for the protection and enforcement of IP rights in North America, but it does not eliminate the need to apply for IP protection. Canadian SMEs that want to sell in the United States should consider taking the steps to protect their trademarks, copyrights, industrial designs, patents and trade secrets as a way to ensure CUSMA/USMCA provisions work to their advantage.

D. Exercise reasonable care and informed compliance

Where are U.S. customs laws and regulations located?

U.S. Customs regulations are explained in-depth in the United States’ Code of Federal Regulations (CFR). CFR Title 19 is broken up into three main sections: Volume 1, Volume 2, and Volume 3. The regulations detail how various agencies including CBP conduct their operations. The specific information in this Guide provides a simplified version to the relevant information provided in the CFR — in particular how it relates to e-commerce shipments. CBP also provides an overview related to e-commerce on its E-commerce page.

“Reasonable care” was mentioned in the Overview section. What is reasonable care and why does it matter to me as a Canadian exporter?

Reasonable care is a legal requirement when importing into the United States under the Customs Modernization Act of 1993 and amended Section 484 of the Tariff Act of 1930. CBP outlines that the importer of record is responsible for using “reasonable care to enter, classify and determine the value of imported merchandise and to provide any other information necessary to enable CBP to properly assess duties, collect accurate statistics, and determine whether other applicable legal requirements, if any, have been met.”

Under reasonable care, there is the expectation that efforts have been made in good faith to provide CBP with the most accurate information possible.

If the Canadian exporter is also acting as the importer of record in the United States, the Canadian exporter is responsible to provide accurate and verified information related to tariff classification, country of origin, and value of your goods, as well as any regulatory requirements.

“Informed compliance” was mentioned in the Overview section. What is informed compliance and why does it matter to me as a Canadian exporter?

“Informed compliance” is based on the idea that, the trade community needs to be clearly and completely informed of its legal obligations to maximize voluntary compliance with CBP’s laws and regulations.  Various topics that Canadian exporters who are acting as the importer of record may find helpful can be found on CBP’s Informed Compliance Publications page.

Do I need a licensed U.S. customs broker? How do I find one that is right for my business?

There is no legal requirement for you to hire a licensed U.S. customs broker to clear your goods. However, many importers opt to do so for the convenience and to assist with using reasonable care. Customs brokers are licensed by CBP to conduct customs business on behalf of importers. The benefits of using a licensed U.S. customs broker include:

• Brokers stay up to date with all customs regulations and procedures and will be aware of changes well before you are.
• They can prepare all the documentation that Canada Customs and U.S. Customs require.
• Before your goods can clear customs, U.S. regulations require a bond for their value plus any duties. Your broker can arrange this bond for you.
• A broker will clear your goods through customs quickly, sparing you storage costs.

If your goods are being imported via an express delivery/courier service (Fed-Ex, DHL, UPS, etc.), the courier automatically uses licensed U.S. customs brokers to clear your goods on your behalf. Contact the company directly if you have questions regarding costs for this service.

If using a freight forwarder, you may need to find a licensed U.S. customs broker. Customs brokers charge for their services, so you may want to contact a few to discuss rates. To locate a licensed U.S. customs broker, there are several resources available:

• A list of licensed U.S. customs brokers can be found on the CBP website under the Ports section by clicking on the state/port of entry you intend to import through.
• The National Customs Brokers & Forwarders Association of America (NCBFAA) has a searchable membership directory that will direct you to the websites and contact information of licensed U.S. customs brokers that are NCBFAA members.
• CBSA offers of list of customs brokers in Canada and the United States.

Helpful tip: If using a licensed U.S. customs broker, you will need to provide them with power of attorney (POA) to conduct customs transactions under Customs regulations 19 CFR 141.32. See some examples here:  DHL POA, FedEx POA, POA from a broker.^{Footnote 3}

If you choose to file your own customs entries, please read CBP’s publication “Importing into the United States” for an overview of what is involved. 

Be aware:It is the responsibility of the IOR to comply with CBP laws and regulations. Under CBP’s “Informed Compliance Guide for Reasonable Care”, CBP suggests consulting customs experts, such as a licensed U.S. customs broker, customs consultant or customs lawyer to enhance ability for informed compliance and undertake reasonable care. CBP’s Informed Compliance Publications page is another helpful resource.

E. Understand regulatory requirements

Is my product subject to Canadian export controls? How do I know?

Check Canada’s Export Control List to see if your product is subject to export controls. CBSA’s Export Guide notes a permit, certificate or license issued by the appropriate Canadian government department is required if exporting restricted goods from Canada to the United States (including Puerto Rico and the U.S. Virgin Islands).

How do I monitor if my product has been recalled in the United States?

The U.S. Consumer Product Safety Commission, U.S. Food and Drug Administration, and U.S. Food Safety and Inspection Services at USDA and the U.S. Department of Health and Human Services all offer recall notification alerts and resources for the products they regulate.

Where can I find information on regulatory requirements for my product such as standards, testing, packaging, safety, etc. prior to shipping to the United States?

Different U.S. agencies oversee regulatory requirements including standards, testing, packaging, labeling, etc. To ensure product compliance, Canadian exporters/sellers are recommended to review the U.S. standards on these products prior to export via National Institute of Standard and Technology, as well as other agencies in charge of importation of certain products. CBP has a list of Partner Government Agency (PGA) Import Guides on its website.  See list below for more information for key PGAs directly.

Consumer Product Safety Commission (CPSC)
The Consumer Product Safety Commission (CPSC) protects the public from unreasonable risks of serious injury or death from thousands of types of consumer products. The CPSC site (available in English and Spanish) includes an easy to use database of regulated products and tools to identify mandatory and voluntary standards. The following are helpful links to begin your product review:

• CPSC’s Regulatory Robot
• CPSC’s Product Database
• CPSC Testing

Food and Drug Administration (FDA)
The Food and Drug Administration is responsible for protecting the public health by ensuring the safety, efficacy, and security of human and veterinary drugs, biological products, and medical devices. FDA's Recognized Consensus Standards database includes all national and international standards recognized by FDA.

U.S. Department of Agriculture (USDA)

• Animal and Plant Health Inspection Service (APHIS)
  APHIS makes sure that all imported agricultural products shipped to the United States from abroad meet the Agency's entry requirements to exclude pests and diseases of agriculture. See APHIS Imports & Exports page for more information.

• Food and Security Inspection Service (FSIS)
  FSIS verifies the safety of imported meat, poultry and egg products to ensure consumer safety. See FSIS import guidance for more information.

Federal Trade Commission (FTC)
The FTC protects consumers and competition by preventing anticompetitive, deceptive, and unfair business practices through law enforcement. FTC enforces labelling and advertising rules on certain products in specific industries. See FTC's advice for selected industries for more information.

Federal Communications Commission (FCC)
The FCC is the federal agency responsible for implementing and enforcing America’s communications law and regulations. It regulates the importation of electronic devices that are equipped with radio frequency or other forms communication transmissions. It also provides guidance to help businesses distinguish the scope of regulated products.

Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF)
The ATF regulates the sale, possession, and transportation of alcohol, tobacco, firearms, ammunition, and explosives via licensing. For more information, please see ATF’s Q&A related to import & export by category of products.

Alcohol and Tobacco Tax and Trade Bureau (TTB)
The TTB is responsible for enforcing the laws regulating alcohol and tobacco importation, product labeling, and advertising. It also enforces the laws relating to the collection of alcohol, tobacco, and firearms and ammunition excises taxes, as well as the labeling, advertising and marketing of alcohol beverages. See TTB Wholesaler/Importer/Exporter resource page for more information.

Environmental Protection Agency (EPA)
The EPA enforces environmental laws in the United States. It provides an introduction page for EPA requirements for imports. Via its Border Center, the EPA also provides information to help comply with environmental laws regulating the import of environmentally sensitive products, materials, and wastes into the United States.

Office of Textiles and Apparel (OTEXA), International Trade Administration
OTEXA supervises the implementation of certain textile and apparel provisions of Free Trade Agreements and preference programs and coordinates efforts to combat illegal textile and apparel transshipment. For more information, see OTEXA’s website on importing into the United States.

The table below gives an overview of those agencies that have oversight by various consumer and food products.Please note, this list is illustrative and does not necessarily include all products or all agencies involved.

Requirements and responsible agencies may vary depending on detailed scope and specific characteristics of products.See Section III.F below for additional information.

F. Comply with labeling and marking requirements

Is English required on the label of products sold in the U.S.? Can other languages be included on the label?

English is required on product labels. In addition to English, foreign language labeling may be marketed anywhere in the United States and its territories.

Canada uses metric system while the United States uses U.S. customary units (e.g., inch and pound). Which system should I use on my labels – metric, U.S. customary units, or both?

The United States has not yet fully adopted the metric system but requires metric units as well as U.S. customary units on most products sold in the United States. If possible, it is recommended that both metric and U.S. customary units be used on labels where permitted.

Depending on the product, there are different regulations related to units of measure. The Fair Packaging and Labeling Act (FPLA) and Uniform Packaging and Labeling Regulations (UPLR) outline the requirements and product scope. See Compliance FAQs: Packaging and Labeling in the U.S. compiled by the National Institute of Standards and Technology for more information.

Also, it is important to note that while most food products must have metric units, meat, poultry, and catfish regulated by USDA are not required to be labeled with metric units.

What country of origin markings are required for imported goods?

Every imported article must be marked in a conspicuous place as legibly, indelibly, and permanently as possible to indicate to the ultimate purchaser in the United States the English name of the country of origin of the article at the time of importation.

Beyond the basic labeling requirements, where can I find additional information such as claims and markings required on my specific product such as:

• Alcoholic beverages: Importing Bottled Alcohol Beverages into the United States
• Cosmetics: FDA’s Cosmetic Import FAQ
• Food: Food labeling is required for most prepared foods, such as breads, cereals, canned and frozen foods, snacks, desserts, drinks, etc. Nutrition labeling for raw produce (fruits and vegetables) and fish is voluntary. FDA refers to these products as "conventional" foods.
  • FDA Food Labeling and Nutrition
  • FDA Manual of Policies and Procedures
  • FSIS Compliance Guidance for Label Approval

• Dietary supplements: FDA Dietary Supplements, considered a special category of products that comes under the general umbrella of foods, but has separate labeling requirements.
• Pet food: FDA’s Pet Food Labels

Helpful tip: for more information on labelling, consult “Exporting to the United States – A Guide for Canadian Businesses”.

G. Prepare required documentation and certifications

What information and documents do I need to provide with my shipment?

The following documents should be included with your shipments:

• Commercial invoice. See the minimum information required by CBP on the invoice as well as further details on invoice contents. Depending on the product, CBP may require additional information on the invoice.
• Packing list
• Bill of lading or airway bill
• Certification of origin noted on the commercial invoice or other documentation. See Question 4 below for information on certification of origin requirements.
• If arriving by ocean carrier, an Importer Security Filing is required to be submitted by the importer of record. See Section II.A for information on ISF filing.

Helpful tip: CBP requires all information be provided in English and that all prices in foreign currency (including CAD) must also be converted to U.S. dollars (USD) on invoices and other entry documents.

What forms are required to clear U.S. Customs?  Who fills them out?

U.S. CBP may require several forms, such as:

• Form 7523: Entry and Manifest of Merchandise Free of Duty, Carriers Certificate and Release, used for informal entries valued >$800 USD and <= $,2500 USD (low-value shipments).
• Form 3461: Entry/Special Delivery, the first document to be submitted to CBP for formal entries. This form is intended to speed release of your goods. Customs signs off on your shipment, either releasing it or designating it for exam. 
• Form 7501: Entry Summary, required for formal entries, is used to calculate duties and provide detailed information regarding the imported product.

These forms may be completed and submitted electronically by an express courier service (such as FedEx, UPS, DHL, etc.), customs broker or freight forwarder (such as with information provided by the seller/exporter.

If acting as the “importer of record”, Canadian exporters may fill out customs forms. An IOR requires an importer number. Canadian exporters that will be acting as the IOR may request a CBP-assigned importer number by completing CBP Form 5106.

Given the complexity of completing a formal entry (shipments valued over $2,500 USD), CBP suggests hiring a licensed U.S. Customs Broker to help fill out appropriate customs forms and clear goods.

Are there recordkeeping requirements I should be aware of?

Canadian exporters that are also acting as the importer of record should be aware of recordkeeping requirements by CBP.  IORs should keep the following information for at least 5 years from the date of entry in hard copy or electronic version to share with CBP upon request:

• any importation, such as declaration or entry;
• transportation or storage of merchandise carried or held under bond into or from the U.S. customs territory;
• verification of origin made under CUSMA/USMCA certification of origin (See Section II.H. question 6below);
• collection and payment of fees and taxes to CBP;
• any other records related to the clearance of goods.

Please see CBP’s “Informed Compliance Guide on Recordkeeping” for more information.

Are there instances in which I can avoid customs forms in shipping my product to U.S.?

Customs forms are not required for de minimis shipments (also referred to as “Section 321 clearance”) so long as the shipments are:

• valued at $800 USD or less,
• not subject to a quota,
• not subject to anti-dumping or countervailing duties, and
• not subject to partner government agency (PGA) requirements.

Customs forms may be required for informal entries and formal entries.
An informal entry (which does not require a posting of a customs bond and is liquidated at the time of release) is permitted for shipments that are:

• valued below $2,500 USD,
• not subject to a quota, and/or
• not subject to antidumping or countervailing duties):

A formal entry is required for shipments that are:

• valued $2,500 USD or more,
• subject to a quota, and/or
• subject to antidumping or countervailing duties

Be aware: Because filing a formal entry is so complicated, CBP suggests hiring a licensed U.S. customs broker to help fill out appropriate customs forms and clear your goods.

Under NAFTA, I needed to submit a NAFTA certificate of origin for duty-free entry (0% tariff) into the United States. Do I need a certificate of origin under CUSMA/USMCA?

NAFTA certificates of origin are no longer accepted by CBP.^{Footnote 4} Under CUSMA/USMCA, a new origin certification process replaces the former NAFTA certificate of origin. For shipments valued:

• $800 USD or less (known as de minimis shipments), no certification is required.
• over $800 USD to $2,500 USD (known as low-value shipments), a written representation certifying that the good qualifies as a CUSMA/USMCA originating good must be provided with the shipment. For example, “I hereby certify that the good covered by this shipment qualifies as an originating good for the purposes of preferential tariff treatment under the USMCA.”
• over $2,500 USD(which is the value threshold for filing a formal entry with CBP), a certification of origin outlining nine specific data elements is required to claim CUSMA/USMCA duty-free preference (0% tariff). Nine minimum data elements are required:
  • (1-4) information (name, address, e-mail address and telephone number, if known) about the certifier, exporter, producer, and importer of the good;
  • (5) description of the good
  • (6) tariff code of the good (at least to the 6-digit level);
  • (7) origin criteria under which the good qualifies;
  • (8) blanket period up to 1 year (if the certification covers multiple shipments); and
  • (9) authorized signature and date.

Helpful tip: Although a standardized certificate is not required, some express delivery services (such as FedEx, UPS, etc.) and other service providers may provide a template for certification of origin.

For formal entries, a blanket certification, which covers all shipments of goods confirmed to qualify for preferential treatment under the CUSMA/USMCA rules of origin up to 1 year, is allowed and may help reduce paperwork and time.

Be aware: In all cases, it is your responsibility to maintain all necessary origin documentation verifying your product qualifies for duty-free (0% tariff) under CUSMA/USMCA.

Who can certify CUSMA/USMCA origin?

The CUSMA/USMCA certification of origin may be completed by the exporter, producer, or importer of the goods and may be placed on an invoice or any other document. The certification of origin may also be completed, signed and submitted electronically by an express delivery service (like UPS, DHL, FedEx, etc.) or licensed U.S. customs broker.

What other documentation, certificates, or information is required for me to ship with my product (such as food products, cosmetics, etc.)

For many consumer products: A manufacturer or importer must certify in writing that its general use (i.e., non-children's product) consumer product complies with all applicable consumer product safety rules or similar rules, bans, standards, or regulations under any law enforced by the Consumer Product Safety Commission for that product. The CPSC has provided a model General Certificate of Conformity for use by manufacturers and importers as an example or form.^{Footnote 5}  The certificate must accompany the product shipment and be furnished to distributors and retailers, and, upon request, to the CPSC and to CBP.

For food, cosmetics, medical drugs, and medical devices: The FDA requires products imported into the United States have an FDA product code that describes a specific product and contains a combination of five to seven numbers and letters. The product code submitted with each FDA line item should match the actual product name and/or invoice description of the product. See example on the next page.

Example of Product Code for Food
Product: Canned Tomato Soup (Concentrated)
Product Code: 38BEE27

For agricultural products (animal products and plant products): The USDA’s Animal Plant Health and Inspection Service (APHIS) ensures all imported agricultural products shipped to the United States from abroad meet the entry requirements to exclude pests and diseases of agriculture. APHIS Manuals help provide specific instances in which additional certificates may be required for animal or plant products.

Are there electronic ways for me to connect with CBP and PGAs in the United States?

Canadian exporters that are also acting as the importer of record may register to access CBP’s Automated Commercial Environment (ACE).  ACE is the system through which the trade community reports imports and exports and the government determines admissibility.  CBP has numerous guides and helpful tips related to ACE on its website, including How to Get Started.

• The ACE Secure Data Portal is a free, web-based access point designed to connect CBP, trade partners and Partner Government Agencies.   The web-based portal allows for some interaction with CBP and PGAs as well as access to your shipment data. 
• For more sophisticated importers, ACE via Electronic Data Interchange (EDI) interface may be more appropriate.  EDI is the communication framework that provides standards for exchanging data via any electronic means. If using a licensed U.S. customs broker, they will have the most sophisticated access, using ACE via EDI interface.
• See a comparison of activities done via ACE portal and EDI interface.

H. Know about tariff codes, tariff rates, taxes & fees

Tariff codes

What is an HS code? Why do I need to know the HS code for my product?

The Harmonized System (HS) is the international “language” of trade. An HS code is a six-digit standard number used by Customs officials around the world – including in Canada and the United States -- to classify products moving across national borders and assess tariff and tax rates on imports. 

An HS code is also known as “tariff code”, “tariff classification code” or “tariff classification”. The difference is that at the six-digit level, the HS code may only describe a broad product category, whereas a tariff code may have up to 10 digits. The more digits in a tariff code, the more specific the product it identifies. Here is an example of a tariff code for a rubber chew toy for dogs:

• 40 - RUBBER AND ARTICLES THEREOF
• 40.16 - Other articles of vulcanized rubber other than hard rubber:
• 4016.99 - Other: [This is the 6-digit HS Code]
• 4016.99.03.00 – Containers of a kind used for the packing, transporting or marketing of merchandise
• 4016.99.05.00 - Household articles not elsewhere specified or included
• 4016.99.10.00 - Handles and knobs
• 4016.99.15.00 - Caps, lids, seals, stoppers and other closures
• 4016.99.20.00 - Toys for pets [This is the 10-digit tariff code for import into the United States]

Where can I find HS codes for imports into the United States and how do I know which HS code describes my product?

There are two key government resources – one in Canada and one in the United States -- to help Canadian companies determine the U.S. tariff code for their products:

• The Canada Tariff Finder, developed by the Business Development Bank of Canada (BDC), Export Development Canada and the Canadian Trade Commissioner Service, allows users to search by keyword or HS code.
• The Harmonized Tariff Schedule of the United States (HTSUS) search engine, available through the U.S. International Trade Commission, the U.S. agency that maintains and publishes the HTSUS, allows users to search by keyword, HS code or by downloading specific chapters of the HTSUS.

Examples of U.S. tariff codes for different products

U.S. tariff rates

What is a tariff rate and where do I find the U.S. tariff rate applied on my product?

Tariff rates, also known as tariffs or duties, applied on imported goods into the United States from most trading partners average less than 5%. Under the Canada-U.S.-Mexico Agreement (CUSMA)^{Footnote 6}, which replaced the North American Free Trade Agreement (NAFTA) on 1 July 2020, nearly all Canadian-origin products are duty-free (0% tariff) into the United States. One notable exception is cheese, which may be subject to a tariff-rate quota (TRQ). See question 4 below for more information on TRQs in place under CUSMA/USMCA.

To find the U.S. tariff rate for your product, use the Canada Tariff Finder. In addition to providing the tariff code, the tool provides both the standard tariff rate (known as “most favored nation” or MFN rate) as well as the preferential tariff rate under CUSMA/USMCA.

With CUSMA/USMCA in place, I thought all U.S. tariffs were eliminated (0% tariff) for Canadian products. Why do I need to know about tariff rates?

To receive duty-free treatment (0% tariff), goods imported into the United States from Canada must meet the CUSMA/USMCA rules of origin, which are the criteria to benefit from the lower tariff. Goods imported from Canada that do not meet the rules of origin are considered “non-originating” and you may be required to pay the U.S. MFN tariff rate upon entry of your goods.
See question 6 below for more information on CUSMA/USMCA rules of origin.

My products are not high-value goods. Can I avoid any/all U.S. tariffs for low-value shipments?  If so, what is the value threshold and the benefits?

You may avoid paying any U.S. tariffs for goods into the United States if the value of your shipment does not exceed the low-value threshold, also known as the “de minimis value”. In the United States, the low-value/de minimis threshold is an aggregate fair retail value in the country of shipment of not more than USD $800 imported by one person on one day.

Note, there are certain exceptions to the low-value shipment threshold. See this chart for more information on exceptions to the low-value shipment threshold.

Be aware: Even if your products are duty-free under CUSMA/USMCA and/or because they are considered low-value shipments, you will still need to know your tariff code.

Are there cases in which U.S. tariffs are not duty-free (0% tariff) under CUSMA/UMCSA and higher tariff rates may be applied on my product?

While the majority of Canadian products will enter the United States duty-free (0% tariff), there are some situations in which your product may not benefit from duty-free access into the United States:

1. Your shipment is valued over $800 USD (which is above the “de minimis” value threshold) and is not considered Canadian-origin under the CUSMA/USMCA rules of origin. See question 6 below for more information on CUSMA/USMCA rules of origin.
2. Your product is subject to a U.S. tariff rate quota (TRQ) which allows for a lower tariff rate (“in-quota rate”) on imports up to a specified quantity (“quota amount”) and a higher tariff rate (“over-quota rate”) on imports that exceed the quota amount. The CUSMA/USMCA provides a list of goods that face a TRQ.^{Footnote 7}

On what value/price will U.S. CBP assess tariffs if a product does not qualify for duty-free entry (0% tariff) into the United States?  For instance, my shipment does not fall under the de minimis-value shipment threshold of $800 USD and my product is not considered a Canadian-origin product.

CBP imposes tariffs on the declared customs value, which is included on the commercial invoice. The declared customs value should be the price the buyer in the United States paid for the goods, not the amount the goods will be sold for in the United States.

Any duty will be assessed on the price paid for the goods (referred to as “ad valorem rate” such as 5%) unless the basis for the duty is some other measure, such as quantity or volume (referred to as “specific rate” such as1.3 cents per kilogram).

Helpful tip: Costs that should be included in the declared customs value: Any money paid for selling commissions, assists, royalties, production costs, packing, proceeds and these items should be noted on the commercial invoice. Failure to include the above is undervaluing the goods and may result in penalties. 

Exclusions from the declared customs value: For goods entering the United States, you do not have to include the cost of freight and insurance in the declared customs value as the U.S. applies duties on the price paid or payable on an FOB foreign port basis. See Section II.A for more information on Incoterms.

What are “rules of origin” and how do they relate to tariffs and shipping my product to the U.S.?

Rules of origin are the criteria needed to determine the national source of a product. They are important because duties often depend on the source of the good and its inputs.

Under the CUSMA/USMCA, rules of origin are used to determine whether U.S. imports from Canada are eligible for duty-free access even though they may contain inputs, materials, components that are not from the CUSMA/USMCA countries of Canada, United States and/or Mexico. Such inputs are considered “non-originating”. See summary of types of CUSMA/USMCA rules of origin in the chart below.

Rules of origin (ROO) key terms

Be aware: If your shipment is valued at more than $800 USD, you should be aware of the rules of origin under the CUSMA/USMCA and determine whether your product meets the ROO and therefore, is eligible for duty-free entry (0% tariff) into the United States.

Your licensed U.S. customs broker may be able to help in reviewing ROOs to determine CUSMA/USMCA eligibility.

What are antidumping & countervailing duties (AD/CVD)? How do I know if my products are subject to AD/CVD duties in the United States?

Antidumping (AD) occurs when a foreign manufacturer sells goods in the United States at less than fair value, causing injury to U.S. industry. AD cases are company specific; the duty is calculated to bridge the gap back to a fair market value.

Countervailing duties (CVD) cases are established when a foreign government provides assistance and subsidies, such as tax breaks, to manufacturers that export goods to the United States, enabling the manufacturers to sale the goods cheaper than domestic manufacturers. CVD cases are country-specific and the duties are calculated to duplicate the value of the subsidy.

The scope of Canadian products currently subject to AD/CVD duties in the United States is quite small and likely does not impact SMEs selling via e-commerce channels. Click here to see the full list of products subject to AD/CVD duties by country.

Be aware: If a Canadian company sources goods from a third country (such as China) that are subject to U.S. AD/CVD duties and then exports the goods to the United States, those products remain subject to AD/CVD duties upon import into the United States. Penalties may be applied by CBP if it determines such import was an attempt to circumvent payment of required duties (including AD/CVD duties) by falsifying the actual country of origin.

U.S. taxes and fees

Are my products subject to federal or state taxes in the United States? If so, what are my responsibilities?

Federal taxes

There is no federal sales tax in the United States.

U.S. CBP may collect a federal excise tax on goods such as alcohol or tobacco. The Internal Revenue Service establishes the amount of this tax and CBP collects it on its behalf.

State and local taxes

CBP does not collect taxes on behalf of any U.S. state. Sales taxes vary by state and locality, and there is no central U.S. government source that lists all U.S. state sales tax rates. One non-governmental resource on current U.S. sales taxes can be found here.

Sales of goods from outside a state (whether from another U.S. state or a foreign country like Canada) are generally subject to state sales tax (unless an exemption or exclusion applies). In short, sales tax will/may apply no matter the sales channel. If using a distributor, the distributor is typically responsible for the sales tax, but should be confirmed. In all other cases, the exporter/seller is liable for state taxes.

Different states have economic nexus laws that determine if a company has a connection to or presence within a state, such as having a warehouse presence in the state. The amount owed, if any, is determined on a state-by-state basis and is calculated on a threshold for total revenue or number of transactions in that state. For example, Kentucky considers vendors who make more than $100,000 in sales annually in the state or more than 200 transactions in the state in the previous or current calendar year to have economic nexus. This non-governmental resource provides a good overview of these state-by-state thresholds.

Helpful tip: Online marketplaces such as (Amazon/FBA, Walmart Marketplace, Shopify, etc.) may collect and/or pay the state or local sales taxes on behalf of the exporter/seller. Check the tax policies of your online marketplace as they may differ depending on the marketplace provider and the level of service you have enrolled in to sell to customers in the United States.

Be aware: While tax guides are helpful, exporter/sellers are advised to obtain legal or tax advice to ensure compliance with sales taxes.

Canada’s GST/HST taxes

According to Revenue Canada’s GST/HST Exports section, the rate of tax to charge for a supply is determined by the place of supply. If your supply is considered an export, it could be a zero-rated supply (a taxable supply that is subject to a GST/HST rate of 0%). To know if your supply is eligible for zero-rating, see GST/HST Info Sheet GI-034, Exports of Intangible Personal Property and GST Memoranda series chapter 4-5-1 Exports – Determining Residence Status.

Are there any other fees that U.S. CBP may apply on my product?

CBP applies a Merchandise Processing Fee (MPF) on imported goods. Goods that originate in Canada and qualify for duty-free entry (0% tariff) under CUSMA/USMCA are exempt from MPF. The CUSMA/USMCA preference must be claimed to receive the MPF exemption. CBP may refund MPFs if CUSMA/USMCA is claimed after importation (called a USMCA 520(d) claim).^{Footnote 8}
CBP applies a Harbor Maintenance Fee for goods arriving by water. HMF must be paid on goods imported to ports on shipments above $800 USD low-value shipment if the product does not qualify for duty-free treatment under CUSMA/USMCA. For more information, consult the list of ports where HMF must be paid.

Value of the shipment

Part II: sending products to the United States

You have taken steps to plan and prepare your product for export sale to your customers in the United States. Orders are coming in from the U.S. and you are ready to ship. Now what?

In this section, we answer questions to help with actually moving your product across the border into the United States. Taking the time to explore various shipping options and considerations of each will help ensure a good fit based on size of product, frequency of shipping, and other costs to factor into selling to a U.S. customer. Specifically, we will cover the following topics:

1. Shipping options and considerations
2. Tackling possible issues at the U.S. border
3. Logistics of customer returns

A. Shipping considerations

Is filing an export declaration via Canadian Export Reporting System required for shipping to the United States?

According to CBSA’s Reporting Commercial Exports, goods destined for the United States and goods valued at less than $2,000 CAD that do not require a permit are not required to file an export declaration.^{Footnote 10}

What shipment options are available to send products to customers in the United States?

Typically, depending on the ship-from location, Canadian shipments can enter the United States via land (truck/rail/bus), air, inland waterway or ocean. Canadian exporters can arrange their shipments via postal service, express delivery services, or freight forwarders, based on their needs. No matter which you choose, all shipments will require some form of customs documentation. The most common shipping modes between Canada and the U.S. are:

• Land:
  • Truck: Many trucking companies carry Canadian exports to the United States. Rates depend on whether you are sending a full truckload or less than a truckload.
  • Bus: If your product is relatively small and light, bus shipment may be an efficient, cost-effective option.
  • Rail: Large bulk shipments are well suited to rail shipping. This method can also involve truck movement to transport the cargo from the rail terminal to your buyer. You get a lower rate for a full carload than you do for a partial carload.
• Air: Air shipment is fast with reasonable insurance and warehousing rates.
• Water: Shipping large quantities of bulk cargo, such as iron ore, petroleum, stone & cement, bulk agricultural products via inland waterway or ocean. This method is specifically used at the Great Lakes-St. Lawrence River waterway to and from Canada and the U.S. The waterway serves major ocean ports in the U.S., including Chicago, Illinois; Detroit, Michigan; Duluth, Minnesota; Buffalo, New York; Cleveland, Ohio; Pittsburgh, Pennsylvania; Toronto, Ontario, Canada; and Montreal, Quebec, Canada. An Import Security Filing (ISF) will be required for freight originating from Canada arriving at a U.S. port via inland waterway or ocean.

Land, air, water – lots of shipping choices. What kind of companies help transport my product to the United States?

To facilitate your shipping across the border, service providers may help ship your products in a streamlined, integrated way with suitable modes of entry. For example,

• Mail/Postal service: For small shipments that comply with Canada Post's size, weight and content regulations, mail can be a cost-effective delivery method. All mail shipments to the U.S. are diverted to U.S. Customs for checking and for assessment of duty where applicable.
• Border-shipping service: a number of cross-border carriers help ship goods from Canada to the United States at U.S. domestic postal rates. These carriers drop your products off across the border at a U.S. postal facility. However, this only applies to orders under $800 and the service may be restricted to U.S.-border regions. See Question 5 below on mailing the package by driving into the U.S.
• Express delivery/express courier services: Express delivery services, such as FedEx, DHL, and UPS, are often used for sending smaller packages and are becoming more reliable than postal service given recent slowdowns across the border within the U.S. Postal Service. They typically use their own equipment and staff, as well as offer customs clearance services.

Helpful tip: If using an express service delivery company, ask if you can consolidate multiple shipments (e.g., to different customers) as a single entry for customs purposes, so any brokerage fees are incurred only once instead of multiple times. After clearing customs, the packages travel onward to their individual buyers.

• Inland waterway logistics services: If you are a Canadian exporter based in the Great Lakes region, waterway logistics may be an option to send your products to major U.S. ports.
• Freight forwarder: For cargo and larger shipments, a freight forwarder may be more cost effective. Freight forwarders do not actually move your freight. They act as an intermediary between an exporter and various shipping services such as trucking, and moving goods by rail, expedited shipping by air freight, or ocean shipping on cargo ships. They are known for handling logistics and often have extensive knowledge on documentation requirements, regulations, transportation costs and banking practices. A forwarder can provide quotations on insurance, freight and other shipping services. Forwarders normally offer these services for a stated fee plus documentation charges, which should be factored into the price you charge for your product.

Helpful tip: Forwarders that specialize in moving goods to the United States and many express delivery services will be familiar with U.S. import regulations and documentation requirements.

Be aware: COVID-19 may cause delay to southbound shipments.

If my products enter the United States via Great Lakes-St. Lawrence inland waterway, what do I need to know about Import Security Filing (ISF)? What information is required?

The Import Security Fil.ing (ISF), which is also commonly known as 10+2, is required to be submitted to U.S. Customs and Border Protection (CBP) no later than 24 hours prior to the cargo being loaded on a vessel destined for the United States via ocean or inland water way (e.g., the Great Lakes). CBP may issue liquidated damages of $5,000 USD per violation for the submission of an inaccurate, incomplete or untimely filing.

For goods shipped via ocean or inland waterway, importers (or their agent) must provide certain data elements no later than 24 hours before the cargo is laden aboard a vessel destined to the United States which include:

• Seller
• Buyer
• Importer of record number / FTZ applicant identification number
• Consignee number(s)
• Manufacturer (or supplier)*
• Ship to party *
• Country of origin *
• Commodity Harmonized Tariff Schedule

Two additional data elements must be submitted as early as possible, no later than 24 hours prior to the ship's arrival at a U.S. port. These data elements are:

• Container stuffing location; and
• Consolidator

Can I drive into the United States and mail a package?

Yes, you may bring a package to mail in the United States. Standard import rules, regulations, and duty rates apply. Questions about specific imports can be directed to the port where you plan to enter. A list of border crossings can be found here.

Bringing in commercial merchandise to mail within the United States requires a user fee or an annual user fee decal.

Helpful tip: CBP has the authority to open all packages and may assess duty. It is recommended that you do not seal packages as they are subject to inspection.

Be aware: Due to COVID-19 travel restrictions, Canadian exporters may not be able to drive into the U.S. Please check Canada’s Global Travel Advisories and U.S. CBP’s COVID-19 Announcements for the latest updates.

Are there any specific considerations I should be aware of to ship products by air? By land? By ocean freight?

The considerations such as time and costs may differ depending on the shipping mode you choose. Below is general guidance and rough estimate of each mode of entry, and some drawbacks that you should be aware if you choose these modes to ship from Canada to the United States.

Different modes of entry into the U.S.

Given the size or weight of my shipments, I have opted to use a freight forwarder. What should I look for in using a freight forwarder?

Ideally, a freight forwarder should satisfy the following criteria:

• Be a member of the Canadian International Freight Forwarders Association (CIFFA). Consult the CIFFA Members Directory.
• Be a member of the International Air Transport Association (IATA).
• Offer a complete line of services such as brokerage, insurance, and packaging, all at competitive rates.
• Have a list of satisfied customers to contact for references.
• Be familiar with your product and with the procedures and requirements for shipping it to the U.S.
• Be large enough to handle your volume of shipping and to provide the scheduling you need.
• Have warehousing facilities.
• Have errors and omissions insurance. This is a form of liability insurance that covers the forwarder against a customer's claims for negligence in clearing and forwarding the customer's goods.

What are Incoterms and how do they apply to my shipment?

Incoterms® is an abbreviation for International Commercial Terms. They are published by the International Chamber of Commerce (ICC) and are widely used in international commercial transactions.

Incoterms provide a common set of rules to clarify responsibilities of sellers and buyers for the delivery of goods under sales contracts. They apportion transportation costs and responsibilities associated with the delivery of goods between sellers (Canadian exporters) and buyers (customers in the United States) reflect modern-day transportation practices. Incoterms significantly reduce misunderstandings among traders and thereby minimize trade disputes and litigation.

Under the Incoterms 2020 rules, EXW (Ex-Works) puts the maximum risk and responsibility on the buyer. It requires the buyer bear all responsibility, risks and costs associated with transporting goods, unloading goods at the terminal at the named port or place of destination, clearing the goods for import clearance and payment, and transporting goods to the place of destination.

DDP (Delivered Duties Paid) puts the maximum risk and responsibility on the seller. It requires the seller take responsibility for clearing the goods for export, bear all risks and costs associated with delivering the goods, unload goods at the terminal at the named port or place of destination, clear the goods for import clearance and payment, and bring the goods to the place of destination. Risk transfers to the buyer at the destination, so it should be stated clearly and precisely.

There are currently 11 Incoterms in use. For detailed information on each, please refer to Incoterms rules published by the ICC.

Helpful tip: When deciding whether to take on the full costs and responsibilities for shipping direct to U.S. consumers from Canada, you should also consider the customer perspective. The Incoterm DDP (Delivered Duties Paid) means you as the exporter/seller arranges for all responsibilities, risks and costs to get the product to your customer. This will avoid any additional costs that need to be paid by your U.S. customer, such as cash-on-delivery (COD) from your express delivery service or a bill from CBP for any applicable tariffs, excise taxes or fees.

Be aware: Amazon (FBA) and other online marketplace require DDP for shipments to their fulfillment centers in the United States.

Do I need additional insurance to protect my shipments from loss or theft? What does export insurance usually cover?

Prior to export, it is recommended that you consider purchasing shipping insurance to mitigate financial impacts in the event of loss, theft, damage or delay of your shipment to your customer in the United States. Without insurance, you may not be able to recover the full sale price of your goods as a courier/carrier’s liability or even a business owner’s policy may be limited in losses covered.

Most courier services such as FedEx, DHL, UPS, as well as many freight forwarders, usually offer shipping insurance to help protect products from loss or theft. Coverage is usually calculated at 110% of the CIF (cost, insurance, freight) or CIP (cost and insurance) value.

Any other costs I should be aware of?

For formal entries (commercial imports on shipments valued at $2,500 USD or higher), CBP requires a customs bond from the importer of record, even if the merchandise being imported is duty-free. (For informal entries, no customs bond is needed.)

A customs bond is a type of surety bond. Surety bonds are similar to insurance policies in that they protect the entity (CBP) that is requiring the bond. There are various types of bonds including Single Entry Bond, Continuous Customs Bond. Some products subject to certain U.S. government agency requirements may require higher bond amounts. The cost depends on the bond value and type. Your licensed U.S. customs broker can assist with setting up a customs bond.

In addition, demurrage (sometimes referred to as “storage”) is a charge applied to shipments left in a terminal after the allotted free time (generally 48 hours for shipments arriving by rail or air and 4 days for shipments via ocean.) Charges vary depending on port, and sometimes cannot be avoided due to product still clearing customs or waiting for inland transportation. UPS provides a helpful overview on demurrage and how to minimize demurrage fees.

B. Tackling possible issues at the U.S. border

How long does it take for my product to clear customs in the United States?

Many e-commerce shipments (including low-value and informal entries) clear customs quickly and without delays.

Prior to the pandemic, air freight shipments could typically be cleared in 1 to 3 business days and for ocean freight shipments 3 to 5 days.

CBP enforces a wide range of laws, including health, safety, and intellectual property rights, so other U.S. agencies may also need to inspect packages, which may delay products at ports. This is particularly common for goods subject to Food and Drug Administration (FDA) regulations, such as medicine, medical devices, and food items. If shipments are chosen for inspection by CBP or another agency, typically an additional 5 to 10 days should be added to clearance time.

What should I do if my shipment is stuck at a U.S. port of entry? Who can I contact?

If your product is delayed, your first action should be to contact whoever shipped your goods to ensure that your shipment is actually stuck in U.S. Customs. Information such as your tracking number will help your shipper locate your package.

If CBP has detained your package for some reason (for example, lack of a proper invoice, bill of sale, or other documentation, a possible trademark violation, or if the package requires a formal entry), CBP will notify you of the reason for detention (in writing) and how you can get it released. First points of inquiry are generally via the ports of entry. Another option is to contact CBP’s Centers of Excellence and Expertise (CEEs).

Helpful tip: See contact information below and this resource for information on CBP’s Centers of Excellence and Expertise, which focus on industry-specific issues by providing tailored support to unique trading environments.

Contact information for CBP’s Centers of Excellence and Expertise

What are the consequences if I am missing or provide incorrect or misleading information, documentation or certifications?

You will not normally be penalized for clerical errors or omissions. However, you must ensure information is accurate and complete. To avoid delays, denial of entry or penalties, it is important to be thorough and precise in preparing information, documentation and labels. Using an express delivery service, licensed customs broker, freight forwarder and/or distributor may help minimize mistakes and oversight in shipping to the United States.

Below are some examples of possible consequences if lacking required information:

• Missing CUSMA/USMCA certification of origin may result in loss of duty-free entry (0% tariff) and having U.S. MFN tariffs and Merchandise Processing Fee levied on your product.
• Lack of documentation or key information does not generally result in denial of entry by CBP but may delay your shipment. CBP or a partner government agency may request more information or documentation to release the product.
• Products incorrectly labeled solely in a foreign language (and without English text) can be detained/seized by CBP, although the importer can voluntarily correct the mistake (e.g., via relabeling).

In extreme cases, CBP may pursue penalties or criminal actions for negligence (failure to exercise reasonable care), gross negligence (“actual knowledge or wanton disregard”) or fraud (“voluntary and intentionally”).

• Negligence or gross negligence can draw penalties of up to four times the duty or 40% of the value of the goods.
• For fraud, such as false valuation, the penalty can be the entire value of the shipment or seizure of the shipment.

Helpful tip: See this resource for information on CBP Centers of Excellence and Expertise, which focus on industry-specific issues by providing tailored support to unique trading environments.

C. Logistics of customer returns

What are my options for processing customer returns from Canada?

Depending on your business model, you can receive the return in Canada or in the United States. Canada’s E-Commerce Export Guide provides a very good overview on processing returns, with key information extracted below:

Receive the return in Canada

“If returned items need to be sent back to Canada, it can be a complicated process. Your company (or your 3PL provider) will have to prepare return orders for Canadian customs. The U.S. Postal Service offers a tool for generating a customs form, which needs to be printed and attached to the package in a separate envelope. The sender must also write ‘Returns/Repairs’ on the customs form. If this is not included on the form, the package will be counted as an import and your company will have to pay any associated duties or taxes upon arrival in Canada.

Helpful tip: Due to the complexity and cost of returning items across the border, it may be more cost-effective to refund the cost of the goods and let the customer keep them.

Receive the return in the United States

If you work with a 3PL company with warehouses in the United States, it may be able to receive returns and restock items for you. This option allows you to receive returns within the United States, rather than shipping them back to Canada. For example, if using FedEx 3PL Service, see FedEx Reverse Logistics and Returns for more information on the services that they offer.

If using a fulfillment center through an online marketplace, there may mandate specific return policies including how they return goods back to you in Canada. For example, if using Amazon, check with the FBA resource documents including for customer returns. If using Shopify, sellers can apply for the Shopify Fulfillment Network, which can manage returns and inventory at an additional cost. The Shopify App Store also provides sellers with the option to download additional software to help manage returns and warehousing.

If using a distributor in the United States, your distributor typically handles the return.

I am not using a fulfillment center or warehouse in the United States and sent my Canadian-origin product direct-ship to my customer. They now want to return it. What basic information should I know?

Goods that were exported from Canada may re-enter Canada duty-free (0% tariff) so long as they are described in sufficient detail on any commercial documents to enable verification that the goods exported are the same goods returning to Canada.

• For goods that initially originated in Canada, the tariff code is 9813.00.00
• For goods previously imported into Canada (non-Canadian goods) that were exported to the United States will re-enter Canada under tariff code 9814.00.00.

The Canadian exporter (now Canadian importer) may be required to provide evidence of the purpose for the export (e.g., shipping documents). If the goods cannot be identified due to their nature, they cannot be classified under tariff codes 9813.00.00 or 9814.00.00 and Canadian duties may apply.

You may want to use a Canadian customs broker to help with the return process. There is a fee for the service. CBSA provides a list of licensed Canadian customs brokers.

This blog post provides a helpful overview on returns shipped back to Canada, including the criteria when CBSA considers that a good originated in Canada.

What do I need to know to send a repaired product back from Canada to the U.S. customer?

The CUSMA/USMCA allows for goods to re-enter the United States from Canada after that good has been temporarily exported for repair or alteration. Products that re-enter the United States will enter under tariff code 9802.00.40 for those articles exported for repairs or alterations covered under a warranty, or 9802.00.50 for those articles exported for repairs or alterations not covered under warranty.

CBP may request documentation to prove actual exportation of the goods from the United States for repairs or alterations, such as a foreign customs entry, a foreign customs invoice, a foreign landing certificate, bill of lading, or airway bill. Similarly, a declaration by the person who performed such repairs or alternations and/or by the owner, importer, consignee, or agent may be required.

Part III: resources & references

Given the importance of Canada-U.S. trade, government agencies as well as service providers and customs experts have developed a number of online resources to answer questions and help facilitate e-commerce cross-border sales into the United States from Canada.

In this section, we provide a number of tools and resources, including:

1. Scenarios to illustrate how import requirements may apply on Canadian goods
2. Checklist to help ensure Canadian exporters consider all the factors of logistics and customs
3. List of common mistakes to avoid
4. Glossary of key terms used in the Guide
5. List of trade-related agencies in the United States and Canada
6. Guides and webpages to various e-commerce and trade-related issues by U.S. and Canadian agencies
7. Publications, guides, policies and webpages from online marketplace providers

A. Export scenarios

A customer in the United States purchased 8 cases of my wine from my website and winery in Canada totaling more than $2,500 USD. In addition to the cost of my wine, what other costs should I consider to calculate the fully landed cost to charge the customer?

• Ocean Freight/Air freight/Express Delivery costs
• U.S. Terminal Handling Fees, if applicable
• Insurance
• Customs brokerage fees
• Customs duties, if any
• Harbor Maintenance Fee, if sent by water
• Federal Excise Taxes
• U.S. Inland Freight

If you as the Canadian exporter arrange for all these items and pay for these costs prior to delivery, this is referred to as DDP (Delivered Duty Paid) under Incoterms. If you do not pay for these costs, your customer may receive a payment notice for delivery or any tariffs before they can receive the goods.

Amazon (Fulfilled by Amazon/FBA) and other fulfillment centers for online marketplaces require you to arrange for and pay these costs. Since FBA does not take ownership of your goods, FBA will not accept goods to their fulfillment centers unless they are DDP.

If you are using a distributor in the United States that takes ownership of your goods, you may negotiate the terms of sale, including which party -- you or the distributor – is responsible for these activities and costs, which may change the Incoterm used from DDP to one that allocates different responsibilities to the exporter and the distributor. See Section II.A for more information about Incoterms.

Can you provide some examples in which there are numerous import requirements so we understand what questions to consider and where to find information?

See three different examples for products that have additional import requirements, including a baby crib, cheese and cosmetics. These are illustrative, and may not cover all import requirements. In addition, other imported products may have similar or different requirements.

Examples of products with additional import requirements

Rules of origin for CUSMA/USMCA seem important to qualify for duty-free access into the United States. Can you provide some examples of rules of origin for different products?

See three different examples for rules of origin applied on products in which the inputs may or may not be from Canada including sparkling wine, a customized t-shirt and a pet toy. These are illustrative, and may not cover all scenarios. In addition, other imported products may have similar or different rules of origin.

Examples for rules of origin applied on products in which the inputs may or may not be from Canada

B. Exporter checklist

Regulatory and import requirement checklist

• Have you registered your business, product and/or facility, if appropriate in Canada and/or the United States? Section I.A
• Do you know what U.S. regulatory requirements apply to your products? Section I.E
• Are you aware of the documents and certifications needed for CBP and other partner government agencies? Section I.G
• Does your label comply with U.S. regulations? Section I.F
• Have you classified your product with the U.S. tariff code, and if not, do you know where to look for tariff classification or get assistance? Section I.H
• Do you know if your products meet the criteria (rules of origin) to be considered “Canadian-origin” to benefit from duty-free (0% tariff) entry under CUSMA/USMCA? Section I.H
• If shipping to U.S. customers other than through a distributor, are you aware of your role as the “importer of record” in the United States? Section I.D
• Have you made yourself aware of the resources available (such as guides, publications, customs experts) to ensure you are taking reasonable care and pursuing informed compliance for your shipments? Section III.F & Section III.G

Transportation, distribution, and customs clearance checklist

• Have you explored the channels available (such as using an online marketplace fulfillment center or a distributor) to get your products to U.S. customers and considered the various logistics with each channel to determine the right fit for your business operations? Section I.B
• Have you decided which transportation option is the best for you (such as express delivery service or freight forwarder), and where to find one that suits your business needs? Section II.A
• Do you need a licensed U.S. customs broker and know where to find one? Section I.D
• Do you know who to contact if your product is stuck at the border? Section II.B

Pricing and cost considerations checklist

• If you have intellectual property, have you obtained IP protection in the United States? Section I.C
• Have you purchased insurance to protect your goods from damage, loss, or theft? Section II.A
• Are you aware of Incoterms and whether you are responsible for arranging customs clearance and paying any applicable tariffs, fees, taxes? Section II.A
• Do you know the tariff rates, excise taxes, and fees that apply on your product? Section I.H
• Are you aware of state sales taxes that you may have to collect and remit to state tax authorities? Section I.H
• Do you know how you will handle customer returns and repairs? Section II.C

C. Common errors to avoid

IP protection

Selecting logistics partner/sales channel

Import documentation

Import & regulatory requirements

Logistics & costs

D. Definitions of key terms in the guide

E. Relevant U.S. and Canadian agencies with trade-related responsibilities

U.S. agencies

Canadian agencies

• Canadian Border Services Agency
• Canadian Trade Commissioner Service
• Canadian Embassy to the United States

F. Relevant U.S. and Canadian regulations and guidance

U.S. Customs and Border Protection (CBP) regulations and guidance

• Introduction to the CBP Import Process (video)
• CBP Importing into the United States Guide
• CBP E-commerce page
  • CBP’s E-Commerce Strategy
  • E-Commerce and Section 321 Shipments
  • E-Commerce: The Price of Importing Counterfeit Goods
• CBP Centers of Excellence & Expertise (CEEs)
• CBP Tips for New Importers and Exporters
• Find a Broker by Port
• Foreign Trade Zones
• In-Bond Regulatory Changes FAQs
• Importing food for commercial use (resale)
• Importing cosmetics
• Importing biological materials
• Importing tea, coffee & spices for commercial purposes
• Importing plants and plant products
• Importing textiles
• Importers Tax Identification/IRS/Importer Number
• Importers - Ordered goods from overseas and the seller said they are being held up by CBP
• Locate a Port of Entry
• Partner Government Agency Import Guides
• U.S. Bonded warehouse manual

Other U.S. agencies’ regulations and guidance

• Consumer Product Safety Commission (CPSC)
  • CPSC’s Business Guides
  • Consumer Product Safety Improvement Act (CPSIA) on children’s products
  • CPSC’s Regulatory Robot
• Environmental Protection Agency’s requirements for importing chemicals under the Toxic Substances Control Act (TSCA)
 
• Food and Drug Administration (FDA)
  • Cosmetics: FDA Cosmetic Importers; FDA/USDA organic cosmetics
  • Drugs
  • Electronic Products
  • Medical devices
  • Food
  • Tobacco
  • Baby products: Cribs for medical use; SIDS claim
• Recall lists - subscribe for recall alerts
  • CPSC’s recall information and alerts
  • CPSC recall list
  • FDA recall alerts
  • USDA FSIS recalls and public health alerts
  • HHS FoodSafety.gov recall and outbreak alerts
• U.S. Harmonized Tariff Schedule/USHTS: U.S. tariff codes and tariff rates

Canadian regulations and guidance

• Doing Business in the United States
• Guide to exporting commercial goods from Canada
• Exporting to the United States - A Guide for Canadian Businesses
• E-commerce Guide to the United States
• Canadian Export Control List
• Canada Tariff Finder
• CUSMA/USMCA Full Text
• Business Development Bank of Canada (BDC) guide on selecting distributors
• Business Development Bank of Canada (BDC) International Expansion Plan
• Tips and guidance on competing in the U.S.
• E-commerce - Grow your global presence
• Practical Guide for a Successful Influencer Marketing Strategy – Fashion and Clothing Sector
• Supplier diversity opportunities for Indigenous businesses
• Supplier diversity opportunities for women

G. Useful publications and guides from Amazon, Shopify, FedEx, etc.

Amazon

• Amazon Beginners Guide
• Sell on Amazon
• Amazon North America Global Selling Guide
• Amazon Seller Central Tax Guide
• Amazon Taxes and Regulations
• Amazon Marketplace Withheld Tax
• Amazon Marketplace Tax Collection FAQ
• Amazon Import and Export Inventory Guide
• Delivering Imports to Amazon (fulfilling from within the United States)
• Amazon’s FBA Export program (fulfilling from within Canada)
• Amazon Program Policies

Shopify

• Shopify Global E-Commerce Guide
• Getting set up to start selling on Shopify

Walmart

• Walmart Fulfillment Services Program
• Walmart Tax Collection Guide
• Walmart Carrier Methods and Shipping Best Practices

eBay

• eBay Selling Internationally
• eBay International Selling Policy
• eBay International Standard Delivery
• eBay Global Shipping Program
• eBay Global Shipping Program: Buyer Terms & Conditions
• eBay International Purchases and Shipping for Buyers
• eBay Tax Information

FedEx

• FedEx CUSMA Guide
• FedEx Guide on USMCA

3PLs

• DHL Solutions Outsourcing Information
• C.H. Robinson Shipping Services
• J.B. Hunt Shipment Services
• J.B. Hunt Third-Party Logistics: Your Solution for Small Business Freight Shipping