What E-Commerce Sellers Really Need to Know About Tariffs & Shipping
If you're an e-commerce seller shipping internationally (or just trying to understand how tariffs impact your margins), this guide is for you.
Maybe your product is made in China, sitting in your U.S. warehouse, and you're wondering:
Who pays tariffs? Can I charge my customers? What if I ship overseas?
Let’s break it down — Q&A style — to make it fun, clear, and actionable.
Q: If the U.S. places tariffs on China, does that affect me if I'm shipping from my U.S. warehouse?
A: Only if your product originally came from China.
When it enters the U.S., it's subject to U.S. import tariffs, and you, the importer, pay them when the product clears customs.
As of 2025, the U.S. is charging a whopping 104% tariff on Chinese imports. That means a $100 product might cost you $204 just to land in your warehouse — before you even sell it.
Once it’s in your U.S. warehouse, you can sell it domestically without any additional tariffs.
Q: Do I need to charge my U.S. customers those tariffs?
A: Not directly — but you’ll probably want to adjust your pricing to account for the higher cost. Most sellers pass on at least part of the tariff by raising their retail price.
Q: What if I ship my product internationally — how do tariffs and duties work then?
A: Now you're in export mode, and customs rules in the destination country apply. That country may charge import duties, VAT, or other fees based on:
- What your product is (HS Code)
- Where it was made (country of origin)
- The declared value and shipping cost
Q: Who pays customs fees when I ship internationally — me or my customer?
A: That’s your call:
- DDU (Delivered Duty Unpaid): Buyer pays taxes/duties when the item arrives. You’re off the hook, but they might get annoyed.
- DDP (Delivered Duty Paid): You pay all taxes/duties in advance, and the item arrives with no surprise fees.
Q: What’s better — DDU or DDP?
A: DDP is almost always better for customer experience.
Why? Your buyer knows the total price upfront, they don’t have to deal with customs, and delivery is faster.
If you're using DDP, you can:
- Include duties/taxes in your product price, or
- Add them as a line item at checkout
Platforms like Shopify, Global-e, and Easyship let you automate this.
Q: Should I charge my international customers for duties and taxes at checkout?
A: Yes — if you want happy customers.
Charging duties and taxes at checkout (using DDP) provides transparency and prevents post-purchase surprises. It also leads to fewer delivery issues, fewer returns, and a smoother overall experience.
Q: Even if I ship from the U.S., is my product still considered "Made in China"?
A: Yes — customs goes by where it was manufactured, not where it’s shipped from.
Q: What if the destination country applies tariffs to U.S. products, but my item is Chinese-origin?
A: You're likely safe from double tariffing — meaning, if your product was already imported to the U.S. and you paid the U.S. tariff, then the destination country won’t charge U.S.-specific tariffs, because:
- The product’s origin is still China
- The U.S. tariffs have already been paid
- The destination country usually cares about where it was made, not where it shipped from
So as long as your documentation reflects the correct origin, you won’t get hit twice.
Q: How does customs know where my product is from?
A: You declare:
- The country of origin on the commercial invoice
- The correct HS code (Harmonized System code)
This is how customs determines which tariffs and duties apply.
Q: Can I “hide” or change the HS code to reduce duties?
A: No — that’s customs fraud.
You must use the correct HS code and declare the true country of origin.
That said, some products can fall under multiple legitimate HS codes — and working with a broker can help find the most favorable one legally.
Q: What if my product is made in China but packaged or lightly assembled in the U.S.?
A: It’s still Chinese-origin.
Simple packaging, labeling, or assembly doesn’t count as “Made in USA.” To claim U.S. origin, the product must undergo substantial transformation and have most of its value created in the U.S.
Q: What about complex products like cars? What makes them “Made in the USA”?
A: For something like a car, origin depends on where the product is substantially transformed into its final form.
- If you just assemble imported parts in the U.S., it may not qualify as U.S.-origin.
- If the engineering, manufacturing, and major value creation happens in the U.S., even with global parts — it could be considered U.S.-made.
Customs looks at where the core transformation and value happens.
Q: What if I ship to Canada? For example:
Product made in China → stored in USA → shipped to Canada
A: Country of origin is still China, so:
- Canadian customs looks at how they treat Chinese-origin goods under that HS code.
- If they don’t apply tariffs to Chinese goods in your category, your buyer (or you, if DDP) pays only GST/HST and maybe a small duty.
Q: What if I ship directly from China? How do tariffs work then?
A: When you ship directly from China to your customer, the destination country determines the duties.
Example A – Shipping to a U.S. Customer (Direct from China)
- Product made and shipped from China
- U.S. considers this a Chinese import
- U.S. tariff (2025): 104%
- Declared at $100 = $104 in tariffs
If DDU: Customer pays tariff at delivery
If DDP: You pay and build it into your price
This is why dropshippers saw margins vanish — a $100 item might cost $204 landed in the U.S.
Example B – Shipping to Canada (Direct from China)
- China origin, value $150
- Duty: 0% (example; varies by product)
- GST (13% in Ontario): $19.50
- Total: $169.50
Example C – Shipping to Germany (Direct from China)
- Product: $100
- Shipping: $25
- Duty (4%): $4
- VAT (19% on $129): $24.99
- Total import fees: $28.99
Q: Can you show full real-world pricing breakdowns?
Example 1 – Selling to a U.S. Customer (from U.S. warehouse)
- Product made in China: $100
- U.S. tariff (104%): $104
- Landed cost: $204
- You sell for $250
Margin: $46 (before fulfillment/shipping)
Example 2 – Selling to a Canadian Customer (DDP)
- Product made in China: $150
- Canada duty: 0%
- GST (13%): $19.50
- You collect $169.50
Customer pays nothing on delivery
Example 3 – Selling to a German Customer (DDP)
- Product: $100
- Shipping: $25
- Duty (4%): $4
- VAT (19% on $129): $24.99
- Total taxes: $28.99
- You charge customer $129 + $28.99 = $157.99
Final Takeaways
- Tariffs hit you when importing goods (e.g., from China to the U.S.)
- Duties/VAT apply when shipping internationally — unless you handle them with DDP
- DDP is best for customer experience (no surprise fees)
- Use the correct HS code and origin declaration to avoid penalties
- Work with a customs broker or automated tool if you're scaling up