When sell DTC to a customer in Canada, for example, (our shop is US based) they get hit with a big tariff and get mad at us for not telling them ahead of time. What is the best way to handle this?
Great question. I’m in Canada myself, this is a familiar problem.
You have two options:
- You can tell your buyers to expect to pay extra on delivery
- You can change the way that you ship, to avoid the extra tariffs on delivery completely
Usually, we recommend not charging fees on delivery at all. When you buy a shipping label, many carriers will let you choose to ship either DDP (seller pays duties and taxes) or DDU/DAP (buyer pays duties and tariffs on delivery). Let’s say that you ship using Fedex on a DDP label. Then when Fedex is charged any tariffs or taxes at the Canadian border, they send the bill to you. The buyer receives their package with no fees on delivery, just like they do domestically.
To offset the extra cost that you need to pay, you can charge the expected duties and taxes as part of your checkout, or increase your base product prices and absorb them silently. Different brands make different choices here. By hiding the increases in your product prices, you offer a shopping experience with no surprises at checkout, which usually helps conversion. On the other hand, I’ve spoken to sellers that prefer to make it very clear that the higher prices are a result of tariffs, and keeping their storefront prices low. You can do either of these using built in tools within Shopify:
- duties calculator to charge at checkout
- using markets to charge higher amounts in a given country (in order to absorb duties costs)
If you really do want to keep the experience where a buyer gets charged duties and taxes on delivery, you can add it to your theme. On higher plans, there is built in per-market theme customization but on lower tier plans, you’ll need to make the changes manually.