Planning for US–Canada Additional Duties in October 2026

What the October 2026 Duty Question Actually Measures

The October 2026 duty question is an effective-date question, not a prediction about trade policy. For each shipment, identify the US measure legally in force on the date the goods enter the United States, then determine whether the goods qualify under its stated scope. A rate announced for a later date should not be applied to an earlier entry, and a rate that expired before entry should not remain in the calculation.

Separate the ordinary customs duty from any US–Canada additional duty. The ordinary duty comes from the product’s tariff classification, customs value and country-of-origin rules. An additional duty is a separate charge layered onto that treatment when the applicable measure says it applies. The result can be zero, one duty, or both. An exemption may remove the additional duty, reduce it, limit it to certain goods or origins, or impose conditions such as documentation or a quota. It does not automatically erase every customs charge.

Retaliatory measures are a separate question: they are duties or restrictions imposed by Canada on covered US-origin goods, rather than an additional US charge on Canadian-origin goods entering the US. Use them when evaluating the cost of shipping US goods into Canada; use the US customs and additional-duty treatment when evaluating Canadian goods entering the US. The US–Canada trade dispute cost guide provides context, while the actual calculation must follow the relevant tariff schedule, notice and exemption language. Do not substitute political commentary for those operative details.

Start With the Merchant’s Landed-Cost Baseline

Before assessing any October 2026 change, establish the current landed-cost baseline for each SKU and shipping lane. Start with the supplier product cost, then record inbound freight, cargo insurance, brokerage or customs-entry fees, applicable duties, import taxes, fulfillment, and currency conversion. Keep costs tied to the shipment or unit they actually support. A warehouse pick-and-pack fee belongs in fulfillment; a broker invoice belongs in brokerage, not product cost.

Currency conversion needs its own line. Convert Canadian-dollar costs using the rate applied by the payment provider, bank, or accounting system, and retain the date and fee. For example, CAD 100 × 0.72 USD/CAD = USD 72 before conversion charges. Do not combine CAD product costs with USD duties and treat the total as if it were one currency. ORVX keeps a merchant’s trading currency and does not mix currencies in one figure.

Taxes require a recoverability check. Include a tax in the economic cost when the business cannot recover it; track a recoverable amount separately rather than allowing it to inflate product margin. Also separate import costs from domestic fulfillment and customer-facing sales tax. That distinction matters when comparing a supplier change, a different carrier, or a new duty rate.

The relevant baseline differs by category because the cost-bearing events are different:

• Apparel: capture fabric or finished-garment cost, freight by carton or unit, classification-dependent duty, brokerage, and returns-related handling. Size and color variants may share a rate but should not automatically share freight or margin assumptions.
• Automotive: separate the part cost from heavy or oversized freight, insurance, brokerage, duties, and any inspection or special-handling charge. Allocate shipment costs by weight, value, or another documented driver.
• Electronics: include component or finished-device cost, freight, insurance, brokerage, duties, currency conversion, and fulfillment. Track accessories and bundled items separately when their import treatment or unit economics differ; see how electronics retailers should measure import costs.
• Food: include product cost, temperature-controlled or expedited freight where applicable, insurance, brokerage, duties, nonrecoverable import taxes, and spoilage or handling costs.
• Furniture: capture product cost, dimensional freight, insurance, brokerage, duties, storage, delivery, and damage-related handling. A per-unit allocation based only on invoice value can understate the cost of bulky items.

The Formula, Stated Plainly

Use the same shipment value, currency and unit basis throughout. Duty amount = customs value × applicable duty rate. If a shipment has multiple tariff lines, calculate each line separately, then add the results. A duty rate of 12% on a $40 customs value produces $4.80 of duty per unit; the rate must be the measure legally applicable to that shipment and date.

Landed cost per unit = product cost + international freight + insurance + duty + brokerage and other non-recoverable import charges. Exclude recoverable taxes from cost, but include any tax or fee the business cannot reclaim. Gross profit per unit = realized revenue per unit − landed cost per unit. Gross margin = gross profit ÷ realized revenue × 100. For store reporting, realized revenue should use delivered orders, not cancelled or returned orders.

Margin change can be stated in percentage points or as a relative percentage. Margin change in percentage points = new gross margin − old gross margin. Relative margin change = (new gross margin − old gross margin) ÷ old gross margin × 100. The first describes the customer-facing economics clearly; the second describes the proportional movement from the starting margin. See the import-cost measurement guide for the same separation between product cost and import costs.

• Finance: use total duty and landed cost to forecast cost of goods, gross profit and gross margin across the affected shipment volume.
• Pricing: use margin change to test whether the current selling price still meets the required margin. A duty increase is not automatically a reason to change price; the decision depends on the resulting margin and commercial constraints.
• Inventory: use landed cost and remaining units to value stock: remaining stock value = units on hand × landed cost per unit.
• Sourcing: compare suppliers or lanes using landed cost, not supplier price alone. A lower quoted product cost can be offset by higher freight, duty or brokerage.

A Worked Example With Real Numbers

Illustrative shipment—not a statement of October 2026 policy. A US merchant imports 100 units from Canada. Each unit costs $40, freight for the shipment is $600, and the customs value is assumed to be the $4,000 product value. The merchant sells each unit for $89, so realized revenue from 100 delivered, non-returned orders is $8,900. To show the effect mechanically, assume a 10% duty rate only for this example; the legally applicable rate and measure must be verified for the actual shipment.

Before duty, landed cost is $4,000 + $600 = $4,600, or $46 per unit. Under the illustrative rate, duty is $4,000 × 10% = $400. Post-duty landed cost becomes $4,000 + $600 + $400 = $5,000, or $50 per unit. That additional $4 per unit reduces gross profit even though the selling price and order volume have not changed.

The comparison below isolates duty from other costs. It does not include payment fees, advertising, returns, or fulfilment charges. Add those separately when measuring contribution or net profit. For a broader import-cost measurement framework, see How Electronics Retailers Should Measure Import Costs.

The Mistakes That Make the Number Wrong

A tariff estimate can be wrong before any multiplication happens. Using the wrong HS classification may apply the wrong rate, while treating Canadian shipment origin as Canadian country of origin can misstate eligibility. Origin follows the applicable origin rules, not the warehouse or port the goods shipped from. Confirm the classification, origin, and any October 2026 measure for the relevant entry or effective date; do not apply a rate based only on the order date, invoice date, or the date the policy was announced.

Customs value is another common failure point. Retail price is not automatically customs value, and supplier cost, assists, royalties, packing, insurance, and freight may be treated differently under the applicable rules. Do not allocate the entire shipment’s freight to products by revenue unless that matches your chosen costing method and the customs treatment. If $1,000 of freight covers 100 units, a $10 allocation per unit is a management-cost convention; it is not automatically the dutiable amount.

Bundles need their own review. A $120 bundle containing a $100 jacket and $20 accessory cannot be assigned to tariff lines by casually splitting the selling price if customs rules treat the bundle differently. Document the classification basis and allocate the bundle cost consistently for profitability reporting. Keep USD and CAD separate: converting the duty at one exchange rate and the product cost at another can create a false margin change.

Do not subtract customer refunds from import duty unless a specific customs process actually returns that duty. A returned order can reduce realized revenue while the import charge remains. Likewise, an exemption is not a zero-rate assumption: verify the product, origin, importer, date, threshold, and required records. Finally, check for double-counting. If a duty or surcharge is already included in landed product cost, adding it again as a separate October adjustment turns a $200 charge into an apparent $400 charge. A SKU-level audit using the approach described in How Electronics Retailers Should Measure Import Costs helps keep customs analysis separate from post-sale profitability.

What to Do With the Answer

Turn the duty result into a decision rule for each SKU, not one blanket pricing change. Recalculate the expected landed cost under current duty, October duty, and a higher-risk scenario. Then set a minimum gross-margin threshold. For example, if a $40 product has $12 of non-product costs and the duty scenario adds $4, a $20 gross-profit target requires a price of at least $76: $40 + $4 + $12 + $20. Test the threshold against contribution after advertising, returns, and refunds before changing the price. ORVX can show product and collection profitability using realized revenue from delivered orders, rather than cancelled or returned orders.

For small exposure, keep the response reversible: delay discretionary purchase orders, negotiate a temporary duty-sharing or price-hold clause, and test an alternate supplier on a limited order. Buy earlier only when the carrying cost and remaining stock risk are lower than the modeled duty increase. For large exposure, obtain supplier quotes from alternate origins, split purchase orders by timing, and document the customs assumption behind each quote. Compare scenarios using the same currency and unit basis, including inventory value if stock arrives before the effective date.

Use US–Canada trade dispute ecommerce cost analysis to frame the profitability decision, and keep the policy assumption separate from the arithmetic. ORVX can report inventory position, dead stock, remaining stock value, gross-margin thresholds, and contribution after advertising; it reports the result but does not reorder, change prices, or negotiate with suppliers.