Welcome to part two of how Canada can fit into your fulfillment strategy.
Here’s where we’re at:
Part 2: Should you add a Canadian node? ← This post
In Part 1, we explored how tariff pressure is pushing US brands to rethink fulfillment - especially those that had relied on Section 321 and low-cost cross-border shipping.
But now comes the harder question:
Should you actually add a Canadian fulfillment node?
The answer depends on your product, sourcing origin, customer base, and operational goals. To help you decide, I’ve pulled together the most important factors operators are weighing - based on interviews with 3PLs, customs experts, and fulfillment consultants working directly with brands facing this decision.
This guide combines what I learned from those conversations with real data and a simple framework you can apply.
A huge thank you to Jesse Mitchell (SFI), Yan Sim (Operating Crew), Jarrett Stewart (GoBolt), and Adam Dambrov (AMD Trade) for sharing what they are observing on the ground.
Why brands are taking a second look at Canada
The old playbook was simple: route shipments through Canada, fulfill to the U.S. under Section 321, and avoid duties.
Now, the economics have changed. But something else has too - Canada is no longer just a tariff workaround.
It’s a $100B+ ecommerce market in its own right, with 80% of the population clustered in a narrow band near the US border, and significantly higher per-capita ecommerce spend than the US.
Brands are still using Canada to solve for landed cost and cross-border risk, but increasingly, they’re thinking of it as a market worth investing in.
Jesse from SFI shared:
"If you lost California, would that hurt? That’s the size of the Canadian market. 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."
A 4-part framework to evaluate the Canada decision
This framework is based on what operators are actually asking when they evaluate Canadian expansion.
1. Where is your product made - and are you still eligible for 321?
The first filter is simple: where your goods are made, and how much of it you’re moving.
If your goods are made in China, Section 321 no longer helps you avoid duties. And those duties aren’t minor.
For home goods, appliances, electronics, and apparel, US tariffs on Chinese-origin goods now range from 25% to 100%+
In some cases (e.g. e-bikes, steel items), they exceed 120%
Adam Dambrov, a trade attorney with 30+ years of experience, put it simply:
“Two years ago, I told clients it made sense to set up a warehouse in Canada to fulfill B2C orders 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.”
But if you don’t manufacture in China, 321 is still active.
Jarrett from GoBolt shared:
"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."
If you qualify, this setup can still save significantly on landed cost — but enforcement is tightening.
Bottom line: If you rely heavily on Chinese sourcing, Canada won’t help with 321. But it might still make sense for other reasons.
2. Do you sell (or plan to sell) to Canadian customers?
Many brands underestimate the Canadian ecommerce market. But the fundamentals are strong:
Metric | US | Canada |
Population | ~330M | ~40M |
Ecommerce GMV (2024 est.) | $1.1T | $105B |
Ecommerce spend per capita | ~$3,300 | ~$2,625 |
Urban population % | 83% | 82% |
Source: eMarketer (2024)
What works in the US usually works in Canada, especially for product categories like:
Home goods
Electronics
Beauty & skincare
Food & beverage
Apparel
Volume threshold matters too. There’s no magic number, but most experts agreed that 20–30 orders per day in Canada is the point where local fulfillment becomes worth considering.
Even if you’re below that, you may want to explore a shared 3PL or partial inventory model to test local fulfillment without a full commitment.
Jesse noted that the market is often underestimated:
"I often hear brands say, 'I don't need to deal with the Canadian market.' I always tell them, if you lost California, would that hurt? That’s the size of Canada. The brands we work with often start small and then realize Canadian customers are an easy win."
3. Can you use Canada to simplify your network?
For many operators, the goal isn’t just duty savings or market expansion - it’s network consolidation.
If your US network is already split coast-to-coast, adding Canada might actually reduce your node count.
Yan from Operating Crew shared:
“We’ve helped brands run just two nodes. Ontario covers Canada and the Eastern US, and Vegas covers the West. That’s two nodes instead of three.”
Ontario warehouses can serve Toronto, Montreal, Ottawa, and major Eastern U.S. cities within 2–3 days.
In most cases:
Canada is a good second node if your US fulfillment is West Coast-heavy
It’s even better if you’re already shipping to Canada from the US and dealing with customs complaints
That said, Canada won’t replace the need for a US node unless your volume is small or highly consolidated.
4. Do you have the internal capability or partners to make setup easy?
Adding Canada comes with operational overhead - but it’s easier than most teams expect.
Yan from Operating Crew shared:
“We helped an electronics brand launch in Canada. We handled NRI and GST in 2–3 weeks. They just had to add French to the instruction manual. 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.”
What you’ll need (more in Part 3):
Non-resident importer (NRI) setup
GST/HST registration
French language labeling (only for some categories)
A 3PL with a Canada presence or cross-border capability
Yan emphasized that setup isn’t the hard part:
"The paperwork isn’t what slows teams down. It’s not having someone to manage the process. With the right partner, the process is fast. Without one, it’s a maze."
A decision matrix to evaluate your Canada move
Here’s a quick way to assess whether Canadian fulfillment is worth pursuing:
Factor | Favours Canada node | Favours US-only setup |
Product origin | Made outside China | Made in China (no 321 savings) |
Canadian sales volume | >10% of total sales; considering expanding in the Canada market | <5% or early-stage |
Cross-border complaints | High WISMO, DDU complaints, returns | Rare or well-managed |
Eastern U.S. shipping volume | Significant orders east of the Mississippi | Mostly West Coast or low U.S. volume |
Internal bandwidth or partners | Consultant/3PL support available | No team to handle setup |
Strategic intent | Planning for resilience and growth | Pure short-term cost focus |
When Canada doesn’t make sense
To be clear, Canada isn’t for everyone.
Don’t add a Canadian node if:
You only sell in the U.S. and don’t plan to expand to Canada
Your product is made in China and you don’t qualify for 321
Your team is small and overwhelmed: you don’t have capacity to manage a second node
You’re trying to shave pennies off last-mile cost instead of building network resilience
In those cases, it’s better to double down on your US fulfillment and revisit Canada when it aligns with your strategic goals.
Yan put it this way:
"Even within the US, if you’re only doing 2,000 orders a month, splitting into two locations may save $2K to $3K a year - not worth the headache of inventory balancing and split shipments. But if you have enough scale, running a Canada + Vegas setup can reduce your network from three nodes to two."
Bottom line
The brands succeeding with Canadian fulfillment aren’t just chasing duty savings. They’re designing networks that reflect today’s tariff landscape, cross-border friction, and market opportunity.
They’re doing it because it:
Improves margin by reducing duty on non-China goods
Opens up a real market with $100B+ in ecommerce demand
Reduces friction and complaints from Canadian customers
Provides network flexibility and resilience
Part 3 will walk through exactly how to set up fulfillment in Canada - from NRI registration to labeling and choosing the right 3PL.
Until then, use this framework to get your head around the decision. If Canada looks like a fit, start exploring who can help you make the move.
