This is a living document which we are updating as the days go by with our experiences and learnings about shipping knives to the USA from Canada since the removal of the de minimis $800 exemption from duties.
While the USA has eliminated the $800 exemption from duties on shipments from Canada, as long as the product is made in North America, it can still cross the border duty free, which means our products should ship to USA customers as before, particularly because we are using American steel; no duties are invoked when the steel is US melted. If we were using non North American steel, the whole cost of the knife is subject to 50% duty unless the correct chapter 99 tariff codes are used to report the steel component of the knife so that only the steel part is dutied. But if the steel is American made, the duty goes away. There a special tariff code for that. The challenge has been to find the right tariff codes to describe all that, particularly the steel exclusion codes for USMCA, IEEPA and section 232 tariff regimes. The other greater challenge is that the shipping carriers and the shipping platforms like Shipstation, weren’t prepared to handle 5 tariff codes per commodity, especially when no user entered codes were required before for under $800 shipments.
Our first 12 shipments starting August 29 were incurring 50% duties (we halted USA shipments until we could avoid those charges) and most customers refused to accept those shipments. We thought we were shipping them correctly by including a USMCA certification of origin and the correct tariff code to describe the knife. We did not know that the US government had added knives into their so called steel derivative products list in the HTSUS tariff bible, chapter 99. The steel tariffs weren’t just about construction grade steel, it is affecting a lot of products imported to the USA with steel in them. We’ve learned that it requires 4 of those chapter 99 tariff codes at this writing, along with the base commodity code to describe our products’ duty free status, plus a certification of USMCA origin.
So those post August 29th knives are on their way back to us now. We opened disputes with UPS for the 4 customers who did pay the duties, with the hope they will be refunded once their disputes get looked at. We have a test shipment on it’s way to the USA right now and assuming that no duties are charged, we should be clear to restart our USA shipments again, as a considerable backlog has developed.
For us it’s been an enormous distraction, using close to 100% of my time the last 3 weeks. During that time I’ve gotten way more familiar with shipping and tariffs than I ever wanted to be. The carriers have been buffaloed overnight into doing a ton of extra work, they’re using AI to scan shipment data and a lot of mistakes are being made. Basically everyone is thrashing and very inefficient right now and we can only hope that it stabilizes and both information and decisions become more predictable.
We will continue to update this post as needed to keep you informed.
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