Selling from Canada to the US: Tax and Duty Implications Before You Ship Cross-Border
Before you ship a single package across the border, you need to understand four things: how US sales tax nexus works for Canadian sellers, the de minimis threshold that determines when duties apply, how your Canadian GST/HST obligations change on export sales, and what customs documentation your shipments require. Getting this wrong doesn't just create compliance headaches — it quietly eats your margin.
The US Is a Different Tax System Entirely — And That's the First Thing to Accept
Canada has a single federal consumption tax (GST/HST) administered by the CRA. The US has no federal sales tax. Instead, it has 50 states, each with their own sales tax rules, rates, and filing requirements. For a Canadian e-commerce owner, this is the single biggest mindset shift required before crossing the border.
Your Canadian GST/HST Obligation on Export Sales
Good news first: goods you physically export to US customers are generally zero-rated for GST/HST purposes. That means you charge 0% GST/HST on those sales — but you can still claim input tax credits (ITCs) on the Canadian costs you incurred to produce them. Exporting doesn't hurt your GST/HST position; it just means you're not collecting tax on those sales.
The key condition: the goods must actually leave Canada. Keep your proof of export (shipping records, customs documents) clean and organized. CRA can ask for them.
US Sales Tax: The Nexus Problem
This is where most Canadian sellers get caught off guard. After the US Supreme Court's 2018 South Dakota v. Wayfair ruling, states can require out-of-state — including foreign — sellers to collect and remit sales tax based on economic nexus: typically crossing a threshold of $100,000 USD in sales or 200 transactions into that state in a year.
What this means practically: - You don't need a physical presence in a US state to owe sales tax there - Each state sets its own threshold, rate, and product taxability rules - Once you cross a state's threshold, you're generally required to register, collect, and file in that state - Some states tax supplements or skincare differently than general merchandise — product category matters
If you're selling through Amazon US, Walmart Marketplace, or Etsy, those platforms act as Marketplace Facilitators and collect sales tax on your behalf in most states. If you're selling through your own Shopify storefront shipping directly to US customers, that obligation is yours.
Customs Duties and the De Minimis Threshold
When your packages cross the border, US Customs applies the de minimis rule: shipments valued under $800 USD per shipment enter the US duty-free and with minimal customs formality. For most small parcel e-commerce, this threshold means individual orders typically clear customs without triggering duties.
Above $800 USD, duties apply based on the product's HTS (Harmonized Tariff Schedule) code. Rates vary widely by product category. You'll need accurate product descriptions and values on your commercial invoices — customs paperwork errors cause delays and unexpected costs.
A few things to flag: - Some product categories (certain textiles, food, health products) face additional scrutiny or restrictions regardless of value - The current trade environment has introduced additional tariffs on specific goods — verify your product's HTS code and any applicable Section 301 or other tariffs before you price your US offer - Your carrier (Canada Post, UPS, FedEx, DHL) will typically handle customs brokerage on small parcels, but you're responsible for providing accurate documentation
Pricing: Don't Forget What the Border Costs You
This is where cross-border expansion quietly bleeds margin. Landed cost to a US customer includes your product cost, Canadian-side fulfilment, cross-border shipping, brokerage fees on higher-value shipments, and any applicable duties. If you're pricing your US storefront the same as your Canadian one without accounting for these, you may be winning customers and losing money at the same time.
Model your fully-loaded landed cost before you set your US prices — not after your first month of US sales.
Where to Start
- Confirm your GST/HST zero-rating applies and document your export evidence
- Map your US sales tax exposure — which states you're selling into, whether you're near any economic nexus thresholds, and whether your platform covers marketplace facilitator collection
- Classify your products under the correct HTS code and check for any special tariffs
- Build a landed-cost model for your US pricing before you go live
- Talk to an accountant who works with cross-border e-commerce — the multi-platform, multi-jurisdiction piece is genuinely complex, and generic advice can cost you
Cross-border expansion can be one of the highest-leverage moves a Canadian e-commerce owner makes. The margin risk is real, but so is the upside — if you know your numbers before the first parcel ships.
Frequently asked questions
Do I need to register for US sales tax as a Canadian seller?
Potentially yes. If your sales into a given US state exceed that state's economic nexus threshold — commonly $100,000 USD or 200 transactions per year — you're generally required to register, collect, and remit sales tax there, even as a foreign seller. If you sell through marketplace platforms like Amazon or Etsy, those platforms typically handle collection on your behalf in most states under marketplace facilitator laws.
Do I still charge GST/HST on orders I ship to US customers?
No. Goods physically exported from Canada to foreign customers are generally zero-rated for GST/HST purposes, meaning you charge 0% on those sales. You can still claim input tax credits on your Canadian business expenses. Keep your proof of export records — CRA may ask for them.
What is the US de minimis threshold and does it apply to Canadian sellers?
The US de minimis threshold is $800 USD per shipment. Packages valued below this amount generally enter the US duty-free with minimal customs processing, regardless of whether the seller is Canadian or American. Above $800 USD, customs duties apply based on the product's HTS classification.
What customs documents do I need to ship from Canada to the US?
At minimum, you'll need a commercial invoice with an accurate product description, quantity, country of origin, and declared value. Your carrier will usually guide you through the specific forms required (such as a USPS customs form or a formal entry for higher-value shipments). Errors or undervaluation on customs documents can trigger delays, fines, or seizure.
Will selling in the US affect my Canadian income tax?
Your worldwide income as a Canadian-resident business is subject to Canadian income tax regardless of where your customers are located. However, if you establish a significant physical presence in the US (warehouse, employees, registered entity), you may also create a US tax filing obligation. For most Canadian e-commerce owners shipping from Canada, the income is taxed in Canada — but confirm your specific structure with a cross-border accountant.
Every business's cross-border tax and customs situation is different — product type, sales volume, platform mix, and trade policy changes all affect what applies to you. This is general education, not advice. Talk to an accountant experienced in cross-border e-commerce before you make any compliance or pricing decisions.
General information only — not tax, accounting, or financial advice for your specific situation.