Flooring cross-border tax: buying US product without losing margin at the border

Origin decides the duty, not the seller's address

A pallet of porcelain bought from a distributor in Buffalo is not automatically CUSMA goods. If the tile was made in Italy, Spain or China, it enters Canada at the most-favoured-nation rate for its tariff classification no matter who invoiced it; only product that actually originates in the US or Mexico under the CUSMA rules of origin comes in duty-free, and only if you hold a valid certification of origin from the exporter or producer. Hardwood milled in Tennessee, vinyl plank made in a US plant and setting materials manufactured stateside typically qualify; engineered flooring with an imported core or tile that merely passed through a US warehouse often do not.

Tariff classification matters as well, because wood flooring, laminate, vinyl plank, ceramic and porcelain tile, natural stone and carpet all sit in different chapters of the Customs Tariff with different rates. We do not classify goods; that is your customs broker's job. We do insist that the broker's entry shows the classification and origin on each line, so the duty in your books can be traced to a decision someone made deliberately.

What you actually pay at the border, and what comes back

The item most often lost is the GST. A commercial import pays only the federal 5 percent at the border, not the full HST, and that 5 percent is fully recoverable as an input tax credit, but only if the broker's document reaches the bookkeeper and is posted in the right period. When a supplier bills you in USD and the broker bills you separately weeks later, the two halves of the same purchase land in different months, and a business that claims ITCs from supplier invoices alone will miss the border GST entirely. We reconcile broker statements to shipments every month for that reason.

Since the CBSA's CARM system became the system of record for commercial imports, the importer of record, meaning you and not the broker, holds the CARM Client Portal account, sees the statements of account and is responsible for the financial security that allows release before payment. If a distributor offers to act as importer of record and deliver duty-paid to your warehouse, that shifts the paperwork but also buries the duty in a price you cannot see; we cost both options before you choose.

USD supplier bills in Canadian books

Once you buy from US distributors regularly, the books need multicurrency switched on in QuickBooks Online or Xero, USD bills recorded at the exchange rate on the invoice date, and the gain or loss between that date and the payment date posted where it belongs rather than dissolving into cost of sales. Quotes to customers should be built from landed CAD cost with an allowance for exchange movement between order and payment, because a two-percent swing on a large hardwood order is a real slice of the markup. If volume justifies it, a USD bank account lets you hold rebates or refunds from US manufacturers and pay the next bill without converting twice. Our answer page on recording USD transactions in Canadian books covers the mechanics and the rate sources CRA accepts.

The tariff picture: hedge your quotes, not your compliance

Canada's retaliatory surtaxes on US goods introduced in 2025 were later narrowed, and the US has run its own duties on imported wood products and on Chinese-made flooring and tile for years. As at the time of writing, most CUSMA-originating US product enters Canada without surtax, but that has changed more than once and may again. Our advice is procedural rather than predictive: put a tariff and exchange adjustment clause in builder contracts and larger retail quotes, hold customer deposits against specific supplier orders so a price change is visible immediately, and record any surtax on its own line in landed cost so you can show a builder exactly what the border added. We do not forecast trade policy; we make sure it cannot surprise your margin twice.

The border is thin; the crew question is not

We will be honest about scope. Very few Ontario flooring installers earn US-source income, and when a US builder does ask for a Canadian crew the questions, from state contractor licensing to state sales tax on materials to treaty protection for a business with no US permanent establishment, are worth a call before the contract is signed rather than a page of generic content here. For the typical flooring company the border touches purchasing and nothing else. The tax issue that actually decides the year is domestic: whether the per-square-foot crews are subcontractors or employees, which we cover in detail on our flooring and tile payroll page. The wider two-country toolkit, for owners who also hold US property or accounts personally, is on our cross-border tax services page.