For many U.S. companies selling goods into Canada, the biggest risk to a successful transaction is not tariffs. The real hurdle is logistics and compliance at the border.
In many cases, products qualify for duty-free treatment under the United States-Mexico-Canada Agreement (USMCA). However, even when no duty applies, most commercial shipments entering Canada remain subject to the five percent Goods and Services Tax (GST) at the time of import.
This raises a strategic question for exporters: Should the U.S. seller act as a Non-Resident Importer (NRI) and control the Canadian import process, or should the Canadian buyer act as the Importer of Record? With Canada’s CBSA Assessment and Revenue Management (CARM) system now fully implemented, your chosen logistics strategy heavily dictates both the ease of doing business and the overall success of the sale.
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Duty-Free To Canada Does Not Mean Border-Free
Even when goods qualify for duty-free entry under a Canadian free trade agreement (CUSMA, CETA, CPTPP, CUKTCA) the core import requirements still apply. Exporters must account for customs clearance procedures, GST payable at import, brokerage fees, transportation costs, and compliance requirements related to classification, valuation, and origin.
Because Federal and Provincial sales tax paid at import can be recovered by a registered business through input tax credits, the real issue is not the tax itself. The issue is deciding who manages the import process and who carries the compliance responsibility.
Option 1: The U.S. Seller Acts as a Non-Resident Importer
Under the Non-Resident Importer model, the U.S. seller takes full responsibility for the Canadian importation process. This involves registering for a Canadian tax account, obtaining a Business Number (BN#) import account, registering in the CARM system, posting financial security bond with Canadian customs, and paying duty (if not CUSMA) and sales tax. As mentioned above, GST (General Sale Tax) is often recoverable.
Why Many Exporters Choose the NRI Approach
There are four major advantages to utilizing the NRI model for your cross-border sales:
- It simplifies the buying process: The Canadian buyer does not need to register in CARM, post financial security, set up customs brokerage arrangements, pay taxes at the border, or manage potential customs audits. This removes friction from the purchasing journey.
- It allows for a clear landed price: Sellers can provide a predictable, delivered price that includes freight, brokerage, and taxes. This transparency reduces buyer uncertainty.
- The exporter maintains compliance control: By acting as the importer, the seller controls product classification, USMCA origin certification, customs valuation, and documentation accuracy.
- It strengthens market access: Companies that regularly sell into Canada often find that the NRI model provides a highly stable platform for ongoing trade and lasting customer relationships.
Essentially, you can sell to Canadian customers by acting as a Canadian company. Localize your offer and remove the barrier of having your customers deal with import issues.
How It Works: Bulk Import and On-Demand Distribution
Transitioning from individual parcel shipping to a bulk distribution model can radically improve access. Here is the step-by-step process of using Jet Worldwide as your Canadian logistics partner:
- Step 1: Establish NRI Status and CARM Registration – Secure your Canadian Business Number and register within the CBSA Assessment and Revenue Management (CARM) portal to act as the legal importer of record.
- Step 2: Bulk Consolidation – Instead of shipping dozens of individual orders across the border, consolidate your inventory into a single bulk shipment. Drastically reduce per-package brokerage fees and international line-haul costs.
- Step 3: Seamless Customs Entry – Your bulk shipment clears the border as a single entry. Ensure your customers never goods without import duty.
- Step 4: Secure Canadian Storage – Your goods are received and stored at a Jet Worldwide facility in Canada.
- Step 5: On-Demand Local Distribution – When a Canadian customer places an order on your website, Jet Worldwide picks, packs, and ships it locally. Your customers receive their items with domestic-speed delivery times.
- Step 6: Scale with Low Minimums – Benefit from Jet Worldwide’s flexible pricing. With low minimum charges, you can maintain a Canadian inventory footprint without the massive overhead typically required by traditional third-party logistics providers.
Expert Insight: This model is especially effective for exporters to Canada who would like to sell to Canada but lacks sales volume to ship regular consolidations.
The NRI Trade-Offs
Acting as a Non-Resident Importer does introduce additional responsibilities. You will face exposure to Canadian customs audits, ongoing tax filings, renewing surety bonds, meeting requirements under CARM, and administrative oversight of import documentation. However, because taxes paid at import are recoverable, the financial impact is generally a matter of timing rather than a permanent cost.
Option 2: The Canadian Buyer Acts as Importer of Record
The alternative is for the Canadian customer to handle the importation themselves. In this scenario, the U.S. exporter sells under shipping terms such as FCA, FOB, or EXW. The Canadian buyer officially becomes responsible for customs clearance.
Advantages for the Seller
This structure keeps the transaction incredibly simple for the U.S. seller. You face no Canadian tax registration requirements, no CARM obligations, no customs audit exposure, and minimal administrative burdens. For exporters that ship to Canada infrequently, this approach is highly appealing.
Potential Challenges for the Buyer
While administratively easier for the exporter, this approach can introduce heavy complications for the buyer. The Canadian customer must arrange their own customs broker, ensure proper CARM registration, post financial security with customs authorities, pay taxes at the time of import, and manage potential customs reviews. For companies that do not regularly import goods, these requirements can create immense hesitation or delay the sale entirely.
The Strategic Question: Who Should Control the Border?
The best approach often depends on your broader business strategy. If the shipment is a one-time transaction and the Canadian buyer is a highly experienced importer, allowing the buyer to handle importation makes sense.
However, if the exporter is building long-term business relationships in Canada, controlling the import process through the Non-Resident Importer model creates a significantly smoother, more predictable experience for customers.
In Modern Cross-Border Trade, Simplicity Matters
Canada’s CARM framework has centralized customs accounting and security requirements, placing much greater responsibility on importers to manage compliance properly. For Canadian companies unfamiliar with these procedures, the administrative burden is severe.
Exporters who remove that complexity often gain a massive competitive advantage by offering a seamless purchasing process.
A Practical Strategy: Offer Both Options
Many successful exporters find growth by providing flexibility. A smart approach might sound like this: "We can deliver the goods directly into Canada and handle all customs requirements, or you may import directly using your own broker if preferred." Providing the choice reassures the customer while allowing you to maintain a streamlined sales funnel.
Final Thoughts
With many goods being able to enter Canada duty-free under CUSMA, CETA, CPTPP, CUKTCA or other Canadian Free Trade agreements, the primary challenge to Canada is usually not tariffs. The opportunity is managing the logistics framework that govern importation so your customers do not have to.
Deciding whether the exporter or the customer should act as the importer is a procedural decision. Giving your customer a choice is a vital strategic advantage to international businesses seeking access to Canada.
