Tariffs are forcing US brands to rethink their fulfillment strategies.
For years, Section 321 allowed companies to ship goods from Canada, Mexico, or Asia into the US without paying duties. It was simple, fast, and cheap.
That playbook is breaking down.
Tariffs are rising. Enforcement is tightening. And the de minimis exemption no longer applies to goods from China. What used to be a cost-saving strategy is now a compliance risk.
Brands that relied on cross-border shipping are being forced to adapt. Some are pulling back. Others are doubling down on Canada, but with a more strategic lens.
To understand what’s actually happening, I spoke with:
Jesse Mitchell (SFI) – US/Canada 3PL + US/Canadian Customs Brokers
Yan Sim (Operating Crew) – Fulfillment strategy consultant
Jarrett Stewart (GoBolt) – U.S./Canada 3PL
Adam Dambrov (AMD Trade) – Trade attorney with 30+ years of experience
They’re on the ground helping brands adjust their networks in real time. And from those conversations, one theme emerged: Canadian fulfillment can work - but only if it fits your long-term strategy.
To break this down clearly, I’ve organized this series into three parts:
Part 1: How to think about the Canada opportunity ← This post
Part 2: Should you add a Canadian node?
If you're evaluating Canada as part of your fulfillment strategy, I hope these articles will help you cut through the noise and give you new perspectives.
Let’s get started with Part 1: How to think about the Canada opportunity
What’s Inside
The Shift → 8 ways top brands are adapting
TL;DR → What smart operators are doing
Introspect → 6 questions to test if Canada makes sense for you
1. Brands that relied on Section 321 are changing course
If you source from China, Section 321 no longer helps you avoid U.S. duties. And with tariff rates fluctuating and enforcement tightening, brands that once ran all U.S. fulfillment from Mexico or Canada are having to split their networks.
Jarrett explained the split:
“There are two different camps right now. Brands that used to do 321 from Canada or Mexico and now need U.S. fulfillment because their stuff is made in China. And brands that still qualify for 321 and are betting it won't go away.
The more popular camp is brands who historically fulfilled either from Canada or from Mexico, and now they’re needing to fulfill in the US because of tariffs and de minimis going away.
We just closed a rug brand doing 40,000–50,000 deliveries a month in the U.S. They had containers on the water and realized they couldn’t bring them into the U.S. because the tariffs would be unbelievable. They were planning to do Canada in 2025 or 2026. Instead, they signed in 10 days and we’re launching with them next week.”
The downside of 321 dependency is clear: if your only warehouse is abroad and you lose eligibility, you’re suddenly stuck with massive import bills - or worse, delays at the border.
Jesse shared a similar case:
“We’ve worked with a kitchen appliance brand that moved all their inventory into Canada. They used to ship 100+ containers a year into the US. Some of those containers had over $100,000 in duties. They shifted everything north and saved millions.”
Tradeoff: Moving quickly protects you from further duty exposure, but it comes with cost - new warehouse setups, tax registrations, inventory redistribution. Brands that waited too long were forced to scramble. Those with a second node already in place had more options.
2. Canada is being treated as a core market, not just a fallback
Tariff pressure is pushing brands to treat Canada not just as a workaround, but as a viable customer base. For many, it’s accelerating a launch they were already considering.
Jesse urged brands to stop underestimating the Canadian market:
“I always tell them: if you lost California, would that hurt? That’s the size of the Canadian market. And Canadians buy more per capita than Americans.
Plus, Canada and the US are arguably the two most similar countries in the world. What works in the U.S. will almost always work here. You don’t need to reinvent your strategy.”
Jarrett has also seen this shift firsthand:
“Some brands weren’t even selling in Canada. They had to avoid US tariffs, so they said let’s launch Canada now. Others were already shipping from the US to Canada and just decided it’s time to open a Canadian node. Tariffs made those decisions easier.”
Tradeoff: Investing in Canada requires upfront time and cost - setting up tax IDs, updating packaging, integrating with new 3PLs. But it also opens up a growing, underpenetrated market with high per-capita spend and potentially lower CAC than the US.
3. Canada has sufficient fulfillment capacity - right now
One concern brands have is whether Canadian 3PLs can support fast-moving operations. The answer: yes, in most locations.
Jesse shared what he’s seeing:
“Outside of Vancouver, there’s ample space and capacity. I’m speaking to new brands every day, and most of them have already reached out to two or three 3PLs.
Montreal, Ontario, and the East Coast all have capacity. But Vancouver is extremely tight - they’re only taking on larger, longer-term clients.”
He added that transportation is holding up too:
“We’re not in peak season, and US demand is soft. That means there’s carrier capacity available for LTL shipments crossing the border. I’m not seeing any trucking bottlenecks.”
Tradeoff: Toronto and Montreal offer warehouse availability and good access to Eastern U.S. markets. But the last-mile cost from Canada to the US is still higher than a US-based node. If your U.S. order volume is high, Canada can be a temporary hedge—but not a long-term replacement unless you’re eligible for 321.
4. Canada as a duty workaround no longer applies in most cases
Section 321 doesn’t apply for Chinese-made goods anymore - eliminating a major incentive for Canadian cross-border fulfillment.
Adam explained why the old playbook doesn’t hold:
“Two years ago, I would’ve said: set up a warehouse in Canada and fulfill B2C orders to the US under Section 321. But that’s not the case anymore.
The de minimis exemption is effectively gone for Chinese goods. Even if you’re under $800, you’re paying duties. That kills the playbook.”
Jarrett added:
“De minimis has gone away for China. So what’s the point? The benefit was massive - and now it’s gone.”
Tradeoff: If you're not sourcing from China, Section 321 may still work. If you are, the risk of relying on it is too high. Even for brands grandfathered into 321 eligibility, the consensus is clear: don't base your network strategy on a loophole that could close overnight.
5. Some brands still fulfill US orders from Canada - but only when it makes sense
Section 321 isn’t totally dead. For brands sourcing outside China, Canadian fulfillment can still be an effective cross-border strategy.
Jarrett pointed to one of GoBolt’s newest clients:
“Our largest deal ever just closed in Toronto - 50,000 to 60,000 units a day. Their stuff isn’t made in China, so they’re still using 321 and fulfilling US orders from Canada.”
Yan added:
“We've seen brands reduce their node count by running Ontario for Canada + Eastern US, and Vegas for the West. Two nodes instead of three.”
Tradeoff: Serving both markets from Canada can work if your volumes skew East, your goods aren’t from China, and your 3PL can handle fast fulfillment. But it won’t work for all brands - and definitely not for those heavily reliant on the West Coast or fast shipping to the US.
6. The legal and operational setup is straightforward, especially with the right help
Canadian expansion sounds harder than it is. Most of the heavy lifting - NRI setup, GST registration, labeling compliance - can be outsourced or done quickly.
Yan said it’s simpler than most think:
“We helped an electronics brand launch in Canada. The only product change was adding French to the instruction booklet.
We handled their NRI and GST registrations in 2 - 3 weeks. Then we shipped containers to Montreal, Jesse’s team picked it up, and they were live within days.”
Tradeoff: The paperwork isn’t the hard part. What slows brands down is not having someone to manage it. With the right partner, the process is fast. Without one, it’s a maze of tax forms, customs rules, and packaging changes.
7. Local Canadian fulfillment simplifies taxes, improves customer experience, and lowers friction
Shipping from the US into Canada often creates a poor buying experience - surprise duties, carrier delays, and unhappy customers.
Yan explained why brands are switching:
“Cross-border creates friction - DDP vs. DDU, unexpected duties, and poor customer experience. Carriers knocking on doors asking for $25 more to deliver.
Even with platforms like FlavorCloud or Global-E, it’s not the same as local fulfillment. Shipping Canada-to-Canada is smoother, faster, and cheaper.”
Tradeoff: Fulfilling locally in Canada improves conversion and reduces WISMO tickets. But it adds operational complexity. If you're serious about Canadian growth, it's worth it. If not, cross-border may still be fine, just expect lower NPS.
8. The smartest brands are optimizing for resilience, not just cost
There’s been a mindset shift among operators. The best teams aren’t chasing short-term duty savings. They’re designing networks that can handle shocks - like overnight tariff spikes or customs changes.
Yan explained the shift:
“Brands are finally investing in operational resilience. It’s not just about saving a few bucks. It’s about being ready if policy shifts again in six months.”
Adam echoed that:
“Your landed duty paid cost has never mattered more. I’ve been doing this 35 years, and I’ve never seen higher duty rates across the board. Companies need to plan proactively, not reactively.”
Tradeoff: Resilience costs more upfront. But it gives you leverage later. A flexible network means you can react when the rules change. That’s the difference between surviving a shock and getting caught flat-footed.
What smart operators are doing right now
Here’s how the best operators are adjusting their networks in response to the latest policy changes:
They’re winding down 321-based fulfillment from China into the US
They’re using Canada to fulfill Canadian orders - and sometimes US ones, if the product is non-Chinese
They’re designing leaner, more flexible networks - often with one node in Canada and one in the US
They’re formalizing their Canadian operations with proper tax and import registrations
They’re prioritizing resilience and control over temporary workarounds
Questions to ask yourself
If you’re evaluating Canadian fulfillment as a strategy, use these questions to pressure-test the idea:
Are your goods manufactured in China? Are you still eligible for Section 321?
Do you already sell into Canada? If not, can your product and marketing easily translate to Canadian consumers?
Do you have enough volume to justify a second fulfillment node?
Would a Canadian warehouse improve delivery times or cost for Eastern US customers?
Do you have the internal bandwidth to manage tax, customs, and relabeling? If not, finding a partner who can do it for you is easy enough.
Is your goal to save money today, or to build a more resilient and flexible fulfillment network?
