Why U.S. Brands Should Leverage Canada

Why U.S. Brands Should Leverage Canada for International Fulfillment

Grow your Canadian business and reduce costs on every international shipment

Ryan Dale-Johnson

Vice President of Business Development, NRI 3PL

For many U.S.-based brands, the default approach is to ship all international orders directly from U.S. distribution centers. It’s simple, and it keeps inventory close to home.

But in today’s tariff-heavy environment, that default could be costing brands more than they realize. Between new duties, tightened drawback rules, and rising landed costs, international expansion strategies need a rethink. One of the smartest moves right now? Leveraging Canada as your gateway for international shipments.

1. Preferential Trade Agreements Lower Your Costs

Canada grants duty free access to almost 100 countries, including Vietnam, Cambodia, Bangladesh, all the EU member nations, the UK, and numerous others. For U.S. brands sourcing from any of these countries, this is especially significant: Canada applies 0% duty on goods, while those same products imported into the U.S. can face double-digit tariffs.

By placing inventory in Canada earmarked for international orders, brands can immediately reduce their cost of goods sold (COGS), thus improving margins, on every international shipment.

2. Duty Drawback That Actually Works

The U.S. drawback program has become increasingly restrictive – many goods are now outright ineligible for drawback, meaning brands can’t recover duties paid even when items are exported.

For goods imported into Canada where there was a duty cost (example China origin products), Canada takes a friendlier approach. Virtually all duties are eligible for drawback, giving brands the ability to recover 100% of what was paid when products are re-exported. This turns what’s often a sunk cost in the U.S. into a recoverable margin boost in Canada.

3. Duty Deferral: Avoid Paying Duties Up Front

Beyond drawback, Canada also offers a duty deferral program that can further improve cash flow and lower costs. With duty deferral, brands importing goods into Canada for the purpose of re-export don’t need to pay duties at all. Instead, duties are postponed or waived as long as the products are shipped out of the country.

This means you don’t just wait to recover money after the fact – you never tie up capital in the first place. For U.S. brands moving product internationally, this creates a smoother, more predictable financial picture and less duty exposure overall.

4. Strengthen Your Canadian Presence at the Same Time

By placing additional inventory in Canada for international fulfillment, brands also unlock new advantages in the Canadian domestic market:

More ATS (Available to Sell): With deeper stock positioned in Canada, you can better serve Canadian customers without constant stockouts or split shipments.
Faster, cheaper fulfillment for Canadian e-commerce: Transit times improve and shipping costs drop when inventory is local.
A stronger growth story: With Canadian consumers spending heavily in apparel, footwear, and lifestyle products, brands can finally treat Canada as more than “just an export market.”

5. A Two-for-One Strategy

In short, leveraging Canada as your global shipping hub creates a two-for-one win:

1. Lower your international landed costs through trade agreements and drawback.

2. Boost your Canadian sales performance by keeping more product on hand locally.

Rather than fighting uphill against U.S. tariff increases, this strategy allows brands to play offense – expanding international reach while protecting margins.

The Bottom Line

For U.S. brands, the question is no longer “should we consider Canada for international fulfillment?” It’s “how soon can we make the move?”

With the right 3PL partner in Canada – one that understands commodity and channel complexity, cross-border trade, and international compliance – you can simultaneously grow your Canadian business and reduce costs on every international shipment.