Navigating Tariffs: Your Guide to International Shipping on Shopify

Sourcing and selling products internationally is a key way to expand your business's reach, product offering, market share, and customer base. However, you must stay on top of evolving tariffs, customs requirements, and duties.

Navigating tariffs, which impose duties and import taxes, means making strategic decisions that impact your business. Shopify has tools to sell cross-border and keep pace with rapidly evolving trade policies.

Find the right HS code

A crucial first step to navigate tariffs is finding the right HS codes for your products. HS codes (Harmonized System codes) are standardized numerical identifiers that classify traded products worldwide and determine their import duties.

The right HS code could mean the difference between a 0% and 15% duty rate or higher. In order to receive accurate tariff rates, you’ll need to add an HS code and country of origin to each product in your Shopify admin. You should also use the HS code from the guide on commercial invoices when importing into the US.

Shopify’s built-in calculator for taxes and duties can help you find applicable rates.

Optimize duties collection

The next step is implementing a strategy for handling costs imposed by duties and import taxes. When shipping internationally, you have two main approaches:

1. Delivered At Place (DAP): Your customer pays duties and taxes upon delivery. While this requires no upfront cost from you, it could lead to surprise fees for customers and potential delivery delays.
2. Delivered Duty Paid (DDP): Duties and taxes are calculated and collected at checkout. This creates a transparent experience for your customers with no surprise fees at delivery. With Shopify, you can either absorb these costs yourself or collect them from customers at checkout.

Managing duties and taxes in international markets

Shopify merchants can use the duties calculator in the admin to estimate duties and import taxes. You can build duties into your prices to cover expected costs, or choose to transparently display duties to customers at checkout. By communicating that no additional fees will apply at delivery, your customers will feel more confident in completing their purchase.

Here’s how:

1. Go to Settings > Taxes and duties in your admin to turn on duties and import tax collection at checkout.
2. Add a country of origin to your products so the correct import tax and duty rates are applied at checkout.
3. Add HS codes to your products to identify what the product is and help avoid border delays.

You can bulk-add HS codes and country of origin via CSV, or add them manually on the product’s page.

Once you’ve opted to collect import taxes and duties, you can choose to show them as a distinct line item at checkout:

Or, use duty-inclusive pricing and tell customers that duties and import taxes are included in the price of goods at checkout:

Purchase Delivered Duty Paid (DDP) labels

Once you calculate and collect duties and import taxes at checkout, you need to purchase and use Delivered Duty Paid (DDP) shipping labels instead of DAP (Delivered at Place) shipping labels for international orders. This ensures your customer is not double-charged for duties and import taxes.

U.S. and Canadian merchants can now purchase Delivered Duty Paid (DDP) shipping labels through DHL Express and DHL eCommerce from the Shopify admin. When fulfilling orders, select DHL Express or DHL eCommerce and choose the prepaid duties option.

Remember to update your shipping policy to explain that customers won't face additional charges upon delivery.

Purchase Delivered at Place (DAP) labels

If you choose not to collect duties at checkout or use DDP labels, you can use Delivered at Place (DAP) labels (also called Delivered Duty Unpaid or DDU). With DAP shipping, you take responsibility for shipping the product, while your customer pays any import or duties fees upon delivery.

You can buy DAP shipping labels in the U.S. and Canada through Shopify when you're fulfilling an order in your admin. For merchants based elsewhere, check with your preferred carrier and assess DDP and DAP options for your region.

Tips for using DAP shipping labels:

• Clearly communicate that customers are responsible for paying duties, taxes, and potential handling fees upon delivery.
• Include this information in your shipping policy and order confirmation emails.

While some postal carriers are actively working to comply with changes and establish methods of duties collection to comply with changes to de minimis, others have announced suspension of all parcels to the US. We recommend regularly checking the status of your postal carrier of choice, and assessing commercial carrier options as a backup for international shipments.

Shopify merchants in select countries can use Track with Shop to let customers track their order's location and status in real-time, creating a worry-free and transparent delivery experience.

Diversify suppliers

Diversifying your supplier base by pivoting to countries with favorable trade agreements can protect against unpredictable cost increases and supply chain disruptions.

Shopify has partnerships with product suppliers through the Shopify App Store. Browse product sourcing apps to find a supplier that fits your business.

Popular product sourcing apps include:

• Collective: find and sell products from Shopify brands.
• Faire: browse Faire’s wholesale marketplace to buy inventory from brands worldwide.
• Printful: create custom products and ship them directly to customers.
• Syncee: sell products from suppliers in the U.S., Canada, Australia, and Europe.

Whether you source products through the Shopify App Store or elsewhere, choose your supplier carefully to ensure they meet your business’s needs.

Use local third-party logistics (3PL) providers

To help reduce the impact of tariffs in your most important international markets, consider working with a local warehouse to fulfill your orders in that country.

When you import bulk inventory to local warehouses around the world, your products are still subject to applicable duties and taxes—however, for these commercial imports, duties are typically calculated on your wholesale invoice value, which may avoid additional per-package handling fees.

This can reduce the impact on your margins, especially for US imports, where international B2C fulfillment is subject to duties and taxes.

Working with a warehouse local to a market can also speed up fulfillment time, reduce shipping costs, and allow you to more easily offer returns to buyers in that market.

Sell across borders with Shopify

Adapting to shifting trade policies is essential for growth. Shopify continues to develop tools that help merchants navigate these complexities with confidence.

Whether through duties collection at checkout or Managed Markets, Shopify is committed to helping you create seamless international shopping experiences that keep your customers coming back.