Key facts
- The Trump administration imposed a 50% tariff on Canadian goods.
- Canadian retailers are establishing U.S. fulfillment centers to avoid tariffs.
- Duer is shifting its supply chain to ship directly to U.S. customers.
- Ssense plans a U.S. fulfillment strategy by 2027.
- Groupe Dynamite increased prices by 9% and saw its stock rally 19%.
The Trump administration has reintroduced significant tariffs on Canadian goods, including apparel, creating instability for Canadian brands reliant on the U.S. market. In response, companies are accelerating plans to establish U.S.-based fulfillment centers and reconfigure supply chains to avoid these new duties.
Ssense, a Canadian online fashion retailer, plans to launch a U.S. fulfillment strategy by 2027. While most of its goods do not originate directly from Canada, this move aims to preemptively address future tariff-related issues. Similarly, the activewear brand Duer, which manufactures in Pakistan, has already shifted to shipping directly to U.S. consumers from its U.S. warehouse, bypassing its Canadian operations. The new tariffs have expedited Duer's plans to establish its own U.S. fulfillment capabilities.
Groupe Dynamite, a Montreal-based fast-fashion retailer with a significant U.S. presence, has felt the impact of tariffs, particularly on goods manufactured in China. The company's strategy of frequent ordering meant little inventory buffer when tariffs took effect. To cope, Groupe Dynamite has slashed orders from China to the U.S. and is boosting orders from countries like Cambodia and Bangladesh. This has led to supply chain inefficiencies and higher prices, with the retailer increasing average selling prices by 9% in the first quarter. Despite softer margins, the company reported higher revenue and profits, and its stock saw a nearly 19% rally.
Other Canadian brands, such as Aritzia, have already moved their U.S. fulfillment operations to the United States. However, U.S. fulfillment costs have risen by 20% in the last three years due to increased demand. International trade attorney Natalie Zink advises businesses to look beyond direct product duties and analyze their entire supply chain for potential cost exposures and opportunities to adapt.