How to Import from Canada to the US: A Complete Guide for Businesses

Are you a business owner who wants to import goods from Canada to the US? If so, you might be wondering what are the steps, costs, and regulations involved in this process. In this article, we will provide you with a comprehensive guide on how to import from Canada to the US, covering topics such as:

The benefits of importing from Canada
The types of goods that can be imported
The trade agreements and tariffs that apply
The customs procedures and documentation required
The best practices and tips for successful importing

By the end of this article, you will have a clear understanding of how to import from Canada to the US and how to avoid common pitfalls and mistakes. Let’s get started!

Benefits of Importing from Canada

Canada is one of the largest and most important trading partners of the US, accounting for about 18% of the total US imports in 2020. There are many reasons why importing from Canada can be beneficial for your business, such as:

Proximity: Canada is geographically close to the US, which means lower transportation costs and faster delivery times.
Quality: Canada is known for producing high-quality goods in various sectors, such as agriculture, energy, aerospace, automotive, and technology.
Diversity: Canada offers a wide range of products and services that can meet the needs and preferences of different markets and consumers.
Compatibility: Canada and the US share similar standards, regulations, and business practices, which makes it easier to comply with the requirements and expectations of both countries.
Stability: Canada and the US have a long-standing and stable political and economic relationship, which reduces the risks and uncertainties of cross-border trade.

Types of Goods that Can Be Imported

You can import almost any type of good from Canada to the US, as long as it meets the legal and safety requirements of both countries. However, some goods may be subject to special rules, restrictions, or licenses, depending on their nature and origin. Some examples of these goods are:

Agricultural products: These include food, plants, animals, and related products. You may need to obtain permits, certificates, or inspections from agencies such as the Food and Drug Administration (FDA), the United States Department of Agriculture (USDA), or the Animal and Plant Health Inspection Service (APHIS).
Controlled substances: These include drugs, chemicals, firearms, explosives, and other items that may pose a threat to public health or security. You may need to obtain licenses, registrations, or authorizations from agencies such as the Drug Enforcement Administration (DEA), the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), or the Department of Commerce.
Intellectual property: These include trademarks, patents, copyrights, and other forms of intellectual property rights. You may need to verify that your goods do not infringe on any existing rights or obligations in either country.

Trade Agreements and Tariffs

One of the main advantages of importing from Canada to the US is that most goods are eligible for duty-free or preferential treatment under various trade agreements between the two countries. These agreements include:

The United States-Mexico-Canada Agreement (USMCA): This is the new trade agreement that replaced the North American Free Trade Agreement (NAFTA) in 2020. It aims to facilitate trade and investment among the three countries by eliminating or reducing tariffs and non-tariff barriers, harmonizing standards and regulations, enhancing labor and environmental protections, and promoting cooperation and dispute resolution.
The Generalized System of Preferences (GSP): This is a program that allows certain developing countries to export their goods to the US at reduced or zero tariffs. Canada is one of the beneficiary countries under this program for some products.
The General Agreement on Tariffs and Trade (GATT): This is a multilateral agreement that regulates international trade by lowering tariffs and other trade barriers among its members. Both Canada and the US are members of this agreement.

To benefit from these trade agreements, you need to ensure that your goods qualify for their rules of origin. This means that your goods must be wholly obtained or produced in Canada or undergo substantial transformation in Canada. You also need to provide proof of origin by filling out a certificate or declaration form.

Customs Procedures and Documentation

When you import goods from Canada to the US, you need to follow certain customs procedures and provide certain documentation to clear your goods at the border. These include:

Filing an entry: This is a process where you declare your goods to the US Customs and Border Protection (CBP) by submitting an entry form (CBP Form 7501) along with supporting documents such as invoices, packing lists, bills of lading, certificates of origin, etc. You can file an entry electronically through the Automated Commercial Environment (ACE) system or through a customs broker.
Paying duties and fees: This is a process where you pay the applicable duties, taxes, and fees for your goods based on their value, classification, origin, and other factors. You can pay these charges online through the ACE system or through a customs broker. You may also be eligible for duty drawbacks or refunds if you export or destroy your goods after importing them.
Undergoing inspection: This is a process where your goods are examined by the CBP or other agencies to verify their compliance with the laws and regulations of both countries. You may need to present additional documents or samples for inspection or testing. You may also be subject to random or targeted inspections based on the risk assessment of your goods.

Best Practices and Tips for Successful Importing

To ensure a smooth and successful importing experience from Canada to the US, here are some best practices and tips that you should follow:

Do your research: Before you import, you should research the market demand, competition, pricing, and regulations for your goods in the US. You should also research the suppliers, logistics, costs, and risks involved in importing from Canada.
Plan ahead: You should plan your importing activities in advance and prepare all the necessary documents and information for your goods. You should also monitor the status of your shipment and communicate with your suppliers, carriers, brokers, and customs officials regularly.
Hire a professional: You may want to hire a customs broker, a freight forwarder, or a trade consultant to help you with the importing process. They can provide you with expert advice, guidance, and assistance on various aspects of importing such as classification, valuation, origin, documentation, compliance, etc.
Be compliant: You should ensure that your goods meet all the legal and safety requirements of both countries and that you pay all the duties and fees that are due. You should also keep accurate records of your importing transactions and cooperate with any audits or inquiries from the authorities.

Trends in Canada-US Trade in 2020

Canada and the United States are each other’s largest trading partners, with bilateral merchandise trade reaching $525.5 billion in 2020. However, the COVID-19 pandemic had a significant impact on the trade flows between the two countries, as both faced lockdowns, border restrictions and economic slowdowns. In this blog post, we will examine some of the key trends and developments in Canada-US trade in 2020, based on the latest statistics from Statistique Canada and Trading Economics.

Exports: Energy and automotive sectors hit hard

Canada’s exports to the United States declined by 15.8% in 2020, from $375.4 billion in 2019 to $316.1 billion in 2020. This was the largest annual decrease since 2009, when exports fell by 31.5% during the global financial crisis. The main contributors to the decline were the energy and automotive sectors, which together accounted for more than half of the total drop in exports.

The energy sector suffered from a sharp decline in oil prices and demand, as well as production cuts by OPEC and its allies. Canada’s exports of energy products to the United States decreased by 37.8% in 2020, from $94.6 billion in 2019 to $58.8 billion in 2020. The largest declines were observed in crude oil (-40.3%), refined petroleum products (-35.4%) and natural gas (-24.7%).

The automotive sector was also severely affected by the pandemic, as factories were shut down and consumer spending was reduced. Canada’s exports of motor vehicles and parts to the United States decreased by 23.4% in 2020, from $86.3 billion in 2019 to $66.1 billion in 2020. The largest declines were observed in passenger cars (-36.7%), trucks (-18%) and engines and parts (-16%).

On the other hand, some sectors saw an increase in exports to the United States in 2020, mainly due to higher demand for essential goods and services amid the pandemic. These included pharmaceuticals (+20%), medical equipment (+18%), paper products (+11%) and agricultural products (+6%).

Imports: Consumer goods resilient

Canada’s imports from the United States also declined by 10% in 2020, from $259 billion in 2019 to $233 billion in 2020. This was the second largest annual decrease since 2009, when imports fell by 19%. The main contributors to the decline were also the energy and automotive sectors, which together accounted for more than two-thirds of the total drop in imports.

The energy sector saw a similar decline in imports from the United States as in exports, as oil prices and demand plummeted. Canada’s imports of energy products from the United States decreased by 38% in 2020, from $25 billion in 2019 to $15.5 billion in 2020. The largest declines were observed in crude oil (-46%), refined petroleum products (-30%) and natural gas liquids (-28%).

The automotive sector also experienced a significant decline in imports from the United States, as production and consumption were disrupted by the pandemic. Canada’s imports of motor vehicles and parts from the United States decreased by 22% in 2020, from $64 billion in 2019 to $50 billion in 2020. The largest declines were observed in passenger cars (-28%), trucks (-20%) and engines and parts (-17%).

However, unlike exports, some categories of imports from the United States increased or remained stable in 2020, mainly due to higher demand for consumer goods and services amid the pandemic. These included pharmaceuticals (+12%), medical equipment (+11%), electrical machinery (+6%), furniture (+5%) and clothing (+1%).

Outlook: Recovery expected in 2021

Despite the unprecedented challenges posed by the COVID-19 pandemic, Canada and the United States remain close and resilient trading partners. According to Statistique Canada, both countries have seen a gradual recovery of their trade flows since May 2020, as lockdown measures eased and economic activity resumed.

The outlook for Canada-US trade in 2021 is positive, as both countries are expected to benefit from vaccine rollouts, fiscal stimulus packages and pent-up consumer demand. However, some uncertainties remain, such as the evolution of the pandemic, the pace of vaccination, the impact of new variants of the virus, and potential trade disputes or disruptions.

References:

http://www.nationalaglawcenter.org/wp-content/uploads/assets/crs/RL33087.pdf

http://nbr.org/downloads/pdfs/eta/PES_2013_summitpaper_Slutz.pdf

https://ustr.gov/countries-regions/americas/canada

International trade statistics – Statistique Canada

United States Imports from Canada July 2023 Data – TRADING ECONOMICS

Canadian international trade in 2020: A year without precedent

https://www.cbp.gov/trade/basic-import-export/importing

https://www.trade.gov/knowledge-product/canada-import-requirements-and-documentation

https://www.export.gov/article?id=Canada-Import-Tariffs

https://www.uscib.org/generalized-system-of-preferences-gsp-ud-1676/