We all know that the Trump administration requires the businesses that import Chinese goods to the U.S. to pay duty costs (up to 15%). That’s the reason why so many US businesses find it too expensive to ship Chinese products directly to US buyers.
Obviously, this creates a big challenge for American businesses and consumers.Selling Chinese products in the U.S. can be hard. As a result, the US online retailers have to either increase the prices of their products or cut down their earnings.
When retailers raise prices, they struggle with a decline in sales. This happens because many consumers don’t want or can’t afford to pay the higher prices on products imported from China. When sellers choose to reduce their margins, their incomes go down.
Luckily, a solution exists. US online retailers can benefit from the cooperation with fulfillment companies outside of the U.S.
American businesses looking to sell Chinese products choose to take advantage of Section 321 and partner with a reliable Canadian third-party logistics provider.
What is Section 321?
Canada and the United States have established a strong trade relationship. It’s fair to say that Canadian shoppers love to buy American products.That’s why the US government provides Canadians with certain benefits.
For example, it’s much cheaper to ship products from Canada to the U.S. than to ship products from China to the U.S.
It’s important to know that Canada’s citizens don’t have to pay any additional duties when shipping their products to the United States.
Section 321 is the program that allows businesses to avoid Trump’s trade war tariffs in a legal way. Section 321 gives e-commerce companies a unique opportunity to benefit from duty-free limits.
The program makes it possible to legally perform the Canadian fulfillment of Chinese good (orders of $800 or less) without the payment of duties.
It’s also important to note that Canadian logistics and fulfillment companies are located close to the Canada–US border. This allows Canadian firms to deliver Chinese goods to American consumers quickly.
Partnering with Canadian firms delivers significant benefits to the US sellers and consumers. These include:
- Elimination of tariffs on orders
- Lower shipping rates
- Fast delivery times
Generally speaking, using a tariffby-passing service helps U.S. businesses reduce shipping expenses and achieve huge cost savings. And of course, it’s a big competitive advantage.
Shipping Chinese Goods under Section 321. Is it Legal?
Yes, it is. It’s legal to import Chinese products to Canada, break goods into orders of $800 and below and then redirect shipments to the United States under Section 321.
However, it’s not legal to conceal the true origin of the products. Let’s say that you’ve shipped Chinese goods to Canada, and then put the "made in Canada" label on them. Clearly, this type of activity is illegal.
What Type of Products Can be Shipped Under Section 321?
It’s worth noting that not all products can be shipped under Section 321. The program makes it possible to ship cheap goods as well as unbranded goods.
Here are a few examples of goods that can be shipped under the program: pillows, toys, cases for mobile phones, shoe cleaners, sunglasses, etc.
Sellers need to make sure thatshippeditems can be broken into orders thatcost up to $800.
How Canadian Third-Party Logistics Providers Work
The main mission of Canadian third-party logistics businessesis to deliver goods from China to the U.S. duty-free.
How do Canadian fulfillment companies work? How do they legally bypass China tariffs via Canada?
Let’s dig deeper into the shipping process and try to get the answers to all these important questions right now.
- Initially, products are shipped from China to Canada. The products arrive at the port of Vancouver.
- Next, items are transported to the facilities of logistics and fulfillment companies via rail.
- A logistics company stores the items.
- After that, products are broken into individual shipments.
- Finally, the products are packed and orders are sent to the United States.
This is what the procedure of shipping products from China to the U.S. via Canada looks like.
Pick a Reliable Canadian Firm that Offers Cross-Border Delivery Logistics
It’s worth noting that there are a lot of third-party logistics providers available in Canada these days. So, it’s very important for U.S. businesses to make a smart choice.
Retailers must be very selective when it comes to choosing a Canadian firm that offers cross-border logistics service.Factors that US retailers should take into account when selecting partners for their businesses in Canada are experience, location and pricing.
Give preference to a Canadian logistics company that has many years of experience in the fulfillment organization. Such firms know their business very well. They are flexible and can help U.S. retailers with any of their distribution needs.
The distribution center of a leading Canadian logistics company, Stalco, is a 1.5km drive from the Canada–US border. Due to a close location to the border, the company sends its trucks to the United States every single day. So, it doesn’t take American consumers too much time to receive their orders from China.
US business owners should pay close attention to a company’s pricing policy. They should aim to deal with Canadian logistics and fulfillment companies that offer the lowest prices on shipping services.
We all know that the trade war won’t last forever, but while it does, the small and medium-sized businesses that survive and thrive will be the ones that adapt to the challenges of the day. Using a Canadian fulfillment company is one that way entrepreneurs are not letting governments stifle their business.