U.S. Tariffs: Protect Your Margins Before They Become a Cash-Flow Problem

Start with the actual rules, not a headline rate

The Trade Commissioner Service identifies U.S. Section 338 tariffs applying to a range of imports from Canada effective August 22, 2026. The Department of Finance also describes Canadian counter-tariffs of 15%, 25%, and 50%, effective September 8, 2026, on selected U.S.-origin products drawn from goods targeted by U.S. Section 338 and Section 232 tariffs.

These measures do not mean every product crossing the border faces the same rate.

CUSMA compliance also does not provide a blanket exemption from every U.S. tariff. The Trade Commissioner Service states that CUSMA-compliant goods are not fully exempt from U.S. sectoral tariffs under Section 232 and are not exempt from U.S. Section 338 tariffs applying to a range of imports from Canada.

Before changing a price or approving an order, have the relevant product classification, origin, tariff measure, and potential exemption checked.

A general news article cannot settle the treatment of a specific shipment.

Understand who pays and who absorbs the cost

The importer of record is responsible for paying tariffs. However, the commercial agreement between buyer and seller can determine how the cost is allocated between them.

For a Canadian exporter, the U.S. customer may be the importer. That does not remove the commercial risk. The customer could request a discount, reduce the order, or compare alternative suppliers.

For a Canadian importer, Canada’s counter-tariffs may directly affect the cost of bringing covered U.S.-origin goods into Canada.

The distinction matters. U.S. import tariffs and Canadian counter-tariffs are different charges on different transactions. Start by identifying the exposure your business actually has.

A cost increase can reduce profit much faster than expected

Consider a hypothetical BC distributor selling a product for $200.

Its total direct cost is $140 per unit, leaving $60 of gross profit and a 30% gross margin.

Now assume verified duty and supplier-cost changes increase that direct cost by $20 per unit.

The cost increased by approximately 14.3%. Gross profit per unit fell by one-third.

Simply adding $20 to the selling price would restore the original $60 gross profit per unit, but it would not restore the original 30% margin.

To preserve a 30% gross margin at a $160 cost, the calculated selling price would be approximately $228.57:

$160 / (1 - 30%) = $228.57

This is a cost-sensitivity example, not an assumed tariff rate. Whether customers will accept that price is a separate commercial question.

Review pricing product by product

Avoid applying one increase across the entire business without checking the underlying costs.

Begin with your most exposed products and largest customer commitments. For each, compare the existing selling price, updated direct cost, gross profit, payment terms, and expected sales volume.

Then decide whether to adjust the price, negotiate with the supplier, change the product mix, or accept a lower margin for a clearly defined reason.

For new quotations, consider whether shorter validity periods or appropriately drafted cost-adjustment terms are needed. Have contractual changes reviewed before relying on them.

A pricing decision should explain what it protects and what it risks.

Test the cash impact before buying more inventory

Buying additional inventory ahead of an announced tariff can appear attractive. It still needs a cash and demand test.

Compare the possible duty saving with the cash tied up, financing cost, storage requirements, and risk that the inventory sells more slowly than expected.

For example, a purchase that saves money per unit may still create a shortage if payroll and supplier payments fall due before those units sell.

Update the cash forecast using the actual payment dates for suppliers, duties, freight, and customer collections. Include a downside in which sales slow after a price increase.

Do not rely on an unapproved funding application or an assumed future tariff reduction to make the forecast balance.

Service businesses should check their customers’ exposure too

Tariffs apply to physical goods, not services such as consulting, architecture, or education.

However, consider the indirect risk: a service firm working with tariff-exposed clients could face delayed projects, tighter client budgets, or slower collections.

For that firm, the right response may be a customer and receivables review rather than a customs review.

The bottom line

Your customs review should establish the applicable treatment. Your financial review should establish what the business will do about it.

Connect the verified rules to product margins, customer conversations, purchasing decisions, and cash requirements.

Finexa CPA Advisory helps Canadian business owners assess the financial impact of changing costs and build practical pricing and cash-flow scenarios, working alongside their customs and legal advisers where needed.

Written by

Bobby Molaie, CPA, MAccFounder and lead advisor at Finexa CPA Advisory

Primary sources

• Trade Commissioner Service: Understanding CUSMA compliance
• Department of Finance Canada: Complete list of U.S. products subject to counter tariffs
• Department of Finance Canada: Process for requesting remission of tariffs on certain U.S. goods
• CBSA: Canadian customs tariff

Sources and guidance reviewed September 8, 2026.