How Canadian SMBs Can Navigate the New U.S. Tariffs

Running a small business in Canada and shipping to the U.S.? 

Then you’ve probably heard the buzz (and maybe felt the stress) about the new U.S. tariffs that kicked in on August 29, 2025. 

Yep, even those smaller orders that used to breeze across the border are now getting hit with duties and brokerage fees.

It’s frustrating, we know. But, the good news is ? 

There are smart ways to handle these changes without letting tariffs derail your U.S. growth.

What’s Actually Changing at the Border?

Here’s the deal: before August 29, 2025, most small shipments from Canada to the U.S. sailed through customs duty-free if they were under $800 USD.

That meant your $50 T-shirt order or $200 skincare bundle usually didn’t raise any red flags.

Now? That safety net is gone. 

The U.S. has tightened its rules, and even low-value packages can get hit with tariffs and brokerage fees. Translation: more costs, more paperwork, and more chances for your customers to be surprised at delivery.

Why the change? The U.S. wants to protect its local manufacturers and close loopholes that let too many “small” imports slip through without duties. Unfortunately, Canadian SMBs—especially e-commerce shops—are caught in the middle.

But don’t worry, this doesn’t mean your U.S. sales are doomed. It just means you’ll need to adjust your shipping game plan a little.

The Real-World Impact on Canadian SMBs

So, what do these new U.S. tariffs really mean for small Canadian businesses? Let’s go beyond the headlines:

1. Cost predictability
   1. Customers love clear shipping costs. With duties suddenly added at the border, that predictability disappears. 
   2. And when a U.S. customer pays more than expected, they’re not blaming the U.S. Customs—they’re blaming you. That’s a trust problem.
2. Checkout conversions
   1. High shipping costs were already a cart-killer. Add “mystery duties” on top, and abandoned carts are going to rise. 
   2. Worse, first-time buyers may never even complete an order if they see a warning about “possible import fees.”
3. Cash flow crunch
   1. Covering duties yourself (through DDP or refunds) can drain cash fast. And if your shipments get stuck at the border waiting for clearance, you’re looking at delayed payments and strained working capital—not a small issue if margins are already thin.
4. Operational overload
   1. Customs paperwork, HS code classification, and courier brokerage fees take time and brainpower. 
   2. For small teams, every extra form or delay is time not spent on marketing, customer service, or product development.
5. Supply chain slowdowns
   1. More inspections and tariff collection mean slower deliveries. That “2-day shipping” promise? 
   2. It might stretch into a week if packages get flagged, which can kill competitiveness against the U.S.-based sellers.
6. Inventory planning pressure
   1. If duties make U.S. demand unpredictable, it’s harder to forecast sales and manage stock. 
   2. Order too much, and you’re stuck with unsold inventory. Order too little, and you miss potential sales when demand rebounds.
7. Brand reputation risk
   1. Even if it’s beyond your control, surprise costs or shipping delays erode trust. Negative reviews about “hidden fees” or “slow delivery” stick around online—and can discourage future buyers.

So the pain is real. But here’s the upside—you’re not powerless. Let’s look at the shipping options available to you and how each one stacks up.

Learn more

Tactical Shipping Options (Pros & Cons)

Alright, so tariffs are here and the border rules have changed. 

The good news? 

You do have options for handling them. 

Let’s break down the main shipping setups Canadian SMBs can use—along with the upsides and trade-offs of each.

• Delivered Duty Paid (DDP)
  • This is where you, the seller, handle all the duties and fees upfront so your U.S. customer gets a smooth, surprise-free delivery.
    • Pros: Happy customers, predictable costs, better checkout conversions.
    • Cons: More complexity for you, plus you’ll need to build those extra costs into your pricing or margins.
• Delivered At Place (DAP)
  • This is the “old school” way—ship the product, and let the buyer pay any duties or fees on delivery.
    • Pros: Simple for you, no upfront duty costs.
    • Cons: Huge risk of frustrated customers, abandoned carts, and negative reviews (“Why did I get a bill at my door?”).
• Third-Party Logistics (3PL) or Freight Forwarders
  • Instead of tackling the border on your own, you work with a partner who bundles shipments, classifies products correctly, and negotiates better brokerage rates.
    • Pros: Lower per-order costs, less paperwork, expert guidance on customs rules.
    • Cons: Requires vetting a reliable partner, and sometimes minimum volumes.
• Zone-Skipping or U.S. Warehousing
  • Some SMBs move inventory across the border in bulk, store it in a U.S. warehouse, and then ship domestically to U.S. customers.
    • Pros: Faster shipping, no surprise duties for customers, and no per-order customs hassle.
    • Cons: Upfront costs, storage fees, and the risk of tying up cash in inventory you haven’t sold yet.

These tweaks may not make tariffs disappear, but they can soften the blow and keep your customer relationships strong.

Wrap up 

Tariffs may add new challenges, but with the right strategy, Canadian SMBs can still keep U.S. shipping smooth and customers happy.

This blog shares our understanding of the current changes—but at AIR7SEAS, we go beyond the basics. 

As logistics experts based in the USA, we use advanced strategies to tackle tariffs head-on and make your cross-border shipments seamless and predictable—so you can focus on growing your business, not paperwork.

1. What exactly changed with the new U.S. tariffs effective August 29, 2025?
The U.S. government removed duty-free allowances for many low-value Canadian shipments under $800 USD, meaning even smaller packages may now be subject to tariffs and brokerage fees.

2. How do I know if my products are affected by these new tariffs?
It depends on your product’s HS (Harmonized System) code. You can check current duty rates and tariff classifications on the U.S. Customs and Border Protection (CBP) website or consult your logistics provider.

3. Is it worth investing in a U.S. warehouse to avoid tariffs?
It depends on your sales volume. If you ship frequently to the U.S., warehousing can reduce delivery time and customs friction—but it comes with upfront storage and inventory costs.

4. Does ISF apply to shipments from Canada to the U.S.?
If you’re shipping by ocean freight from a Canadian port to the U.S., yes—ISF rules apply. But if you’re shipping by truck, air, or courier, ISF is not required.

5. How can small businesses manage the extra costs from tariffs?
You can build duties into your pricing, use a logistics partner to optimize shipping routes, or consolidate shipments to reduce per-order costs.