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Impact of New Tariffs on Second-Hand Luxury Bags and Items (Canada-to-U.S.)

Denisse Garcia

3/6/20259 min read

worm's-eye view photography of concrete building
worm's-eye view photography of concrete building

Vehicles lining up at a U.S. border inspection station. President Trump’s implementation of a 25% tariff on imports from Canada in March 2025 has significant implications for cross-border businesses. This tariff is imposed on a wide range of goods, including second-hand luxury apparel and accessories​. For a business that ships pre-owned designer bags from Canada to U.S. customers, it is crucial to understand who pays these tariffs, how the goods are classified, and what strategies might help mitigate the cost. Below, we address each of these key points in turn.

Who Is Responsible for Paying the Tariff?

Legally, the importer of record is responsible for paying import duties and tariffs to U.S. Customs. In this scenario, the U.S. customer is listed as the importer of record, which means the customer would be the one obligated to pay the 25% tariff (and any other duties) when the item enters the U.S.​ In practice, this tariff would likely be collected before or upon delivery – for example, the courier or customs will require payment from the buyer before releasing the package. As a result, an American buying a second-hand luxury bag from a Canadian seller would effectively see the price increase by 25% due to the tariff​ (unless the seller arranges to pay it on the customer’s behalf).

Tariff Rate and Classification for Second-Hand Luxury Bags

Under the new March 2025 policy, second-hand luxury goods shipped from Canada to the U.S. are subject to a 25% import tariff​

This tariff is applied on top of any existing import duty that normally applies to the item’s classification in the U.S. Harmonized Tariff Schedule. In other words, pre-owned designer bags are not given a special exemption – they are treated similarly to new goods in their category, with the 25% added on.

Classification: A used luxury handbag is typically classified under the same HTS code as a new handbag of its type. For example, a leather purse would fall under HTS 4202.21.9000 (handbags with outer surface of leather, valued over $20) and normally carries about a 9% ad valorem base import duty for most countries​

(This base rate can be 0% if the item qualified for USMCA as North American origin, but most high-end bags are made in Europe or Asia, so they don’t qualify as Canadian-origin goods.) The new 25% tariff is in addition to such base duties. That means an imported pre-owned Chanel or Louis Vuitton bag made in France, for example, could face roughly 34% total duties (9% base MFN duty + 25% Canada tariff) when entering the U.S. from Canada.

It’s important to note that tariffs are typically based on the product’s country of origin, not just the shipping location​

This has caused some confusion for resellers: if a bag was originally made in Italy or the U.K., would it escape the “Canada tariff”? The policy announcement was broadly worded as a 25% tariff on “all products coming into the United States” from Canada​

Early guidance was unclear on whether country-of-origin rules would override this. In theory, if the tariff is implemented strictly by origin, a used British-made handbag might not incur the 25% Canada-specific tariff (it would just be charged the normal U.S. duty)​. However, as of March 2025, you should assume the 25% applies to any shipment from Canada, regardless of where the item was originally made. The intent of the emergency tariff was to target imports via Canada, so practically all second-hand luxury bags shipped from Canada are being treated as dutiable under the new tariff. (Official customs regulations may later clarify this point, so keep an eye on CBP notices, but most small businesses are bracing for the full 25% on their cross-border sales unless told otherwise​.

Finally, be aware that prior to this tariff, many low-value shipments flew under the radar due to the de minimis threshold. Normally, U.S. customs waives duties on shipments valued under $800 (Section 321 de minimis rule)​. This loophole has now been closed for imports from Canada. The tariff executive order included suspending the $800 de minimis duty exemption for Canada, Mexico, and China​

That means even a $200 second-hand item will no longer enter duty-free – it’s subject to the 25% tariff (and any base duty) just like higher-value shipments. In short, every second-hand sale from Canada to a U.S. buyer can incur tariffs now, regardless of value. This is a major change from how things were before March 2025, when staying under $800 allowed many casual sales to avoid import charges.

Strategies to Minimize or Avoid the Tariff

Given these new costs, cross-border businesses are looking for legal ways to reduce the impact. Here are some practical strategies you could consider:

  • Use a U.S. Fulfillment Center or Warehouse: Instead of shipping each bag individually from Canada to the U.S., you can bulk-import your inventory to the U.S. and fulfill orders domestically. For example, your Canadian business can send a larger shipment of items to your U.S. business (or a third-party 3PL warehouse in the States) and clear customs in one go. Your U.S. entity would then be the importer of record, pay the 25% tariff on that bulk shipment, and afterward ship out orders to U.S. customers from within the country. This approach has a few benefits: (a) Customers get faster, hassle-free delivery (no surprise COD duty payments, since the items are already in the U.S.), and (b) you might save on shipping costs by consolidating shipments. The total tariff cost remains – you can’t avoid the 25% if the items cross the border – but you gain control over the import process. You can ensure proper classification and perhaps negotiate better shipping or brokerage rates for one larger import, versus many small ones. In essence, you’d be restructuring your logistics so that the U.S. side of your business handles distribution, making the international border crossing a B2B transfer rather than a B2C sale. (Note: By doing this, you as the seller take on the tariff cost up front. You’d need to factor roughly +25% into your pricing or profit margins. But it spares your customers the inconvenience and sticker shock of paying tariffs themselves at delivery.)

  • Leverage Any Tariff Exemptions or Special Rules: With the blanket Canada tariff in place, there are few outright exemptions, but make sure you take advantage of any that do exist. One such provision is for goods that are originally made in the USA and returning. If any of your luxury bags were manufactured in the United States (for example, certain vintage Coach or Dooney & Bourke bags made in the USA decades ago), those can typically re-enter the U.S. duty-free under the HTS 9801.00.10 “American Goods Returned” provision. In theory, U.S.-made goods shouldn’t be subject to the 25% tariff either, since they are not foreign products. You would need documentation or markings proving U.S. origin to use this exemption. Another angle is the country-of-origin documentation for non-Canadian goods: as mentioned, if an item was made in Europe, it normally incurs the standard duty but might not fall under the Canada-specific tariff if that policy is refined to target Canadian-origin products​

    • It’s worth clearly indicating the correct country of manufacture on customs paperwork. At a minimum, this ensures you pay the correct base duty (for instance, a French-made leather bag shouldn’t accidentally be charged as if it were Canadian-made leather goods under USMCA). Monitor any updates from U.S. Customs and Border Protection – if they later exempt non-Canadian-origin items from the 25% surcharge, you’ll want to capitalize on that by providing proper certificates of origin.
      Aside from origin-based exemptions, note that traditional small-value exemptions (like the ~$800 de minimis or “gift” exemption) are no longer available for Canada shipments in this tariff regime​

    • Splitting a shipment into smaller parcels won’t dodge the tariff now. Trying to undervalue invoices is illegal and risky, so stick to lawful strategies.

  • Restructure Your Sales Model (and Incoterms): You mentioned having businesses in both countries; use that to your advantage. You could restructure transactions such that the sale occurs via your U.S. entity instead of the Canadian one. For instance, your Canadian company can transfer inventory to the U.S. company (as a bulk sale or consignment at cost), and then the U.S. company sells to the end customer. This way, the customer is buying from a U.S. seller, and from their perspective the item is domestic. As discussed, the U.S. business would handle importing the goods (paying the tariff). This model (essentially operating a U.S. reseller arm) can preserve your U.S. customer base by removing the friction of international purchasing. Yes, your overall operation will eat the tariff cost, but you can adjust pricing across your catalog to spread that cost out. You might find U.S. consumers are willing to pay a bit more for a seamless experience, but many would balk at an unexpected 25% fee due on delivery. In summary, reorganizing so that inventory is imported and owned by your U.S. business before sale can be a smart move to keep sales flowing despite the tariff. Be sure to consult a tax advisor on the proper transfer pricing and accounting between your Canadian and U.S. entities when doing this.

  • Bonded Warehouses or Free Trade Zones (FTZs): If you have a high volume of inventory rotating between countries, you could look into using a U.S. bonded warehouse or FTZ. These are special facilities where imported goods can be stored without immediately paying duties. For example, you might ship your luxury bags into a bonded warehouse in the U.S., and they won’t incur the tariff until they leave the warehouse into U.S. commerce (i.e. when sold to a customer). If an item doesn’t sell and you decide to re-export it or return it to Canada, you wouldn’t have to pay the U.S. tariff on that item at all (since it never officially entered U.S. commerce). This strategy doesn’t avoid the tariff on items you do sell to U.S. buyers, but it can help optimize duty payments: you pay only for the goods that actually get sold in the U.S., and you can hold others in bond (or even fulfill international orders from the bonded warehouse, sending to other countries duty-free). FTZs similarly could allow you to bring items in, then perhaps add value or sort them, and only incur duties when they ship out to U.S. destinations. Setting up in an FTZ or bonded facility has administrative overhead, so it’s generally worthwhile only if you are dealing in larger volumes or very high-value inventory that might be diverted to different markets.

  • Adjust Sourcing or Routes if Possible: Depending on where you acquire your luxury bags and accessories, you might alter the path to the U.S. market. For instance, if some of your inventory comes from Europe or Asia originally, you could consider shipping directly into the U.S. from the source country, rather than importing into Canada first. While this doesn’t change the U.S. duties, it avoids layering Canadian import and re-export on top. (For example, a bag coming from Europe could be sent straight to your U.S. warehouse, so you pay the 9% duty and 25% tariff once, instead of potentially paying Canadian import fees then U.S. fees.) Similarly, if you have U.S.-based suppliers or can purchase more stock within the U.S., that inventory would not need to cross the border at all. Any increase in domestic sourcing reduces your exposure to tariffs. In short, minimize moving goods through Canada when their end destination is the U.S. – each border crossing now carries a heavy cost. Focus on either keeping goods on the U.S. side or only importing once.

  • Advocacy and Long-Term Planning: Unfortunately, there is no magic loophole to completely avoid this tariff if you’re sending goods from Canada to the U.S. (aside from the few cases mentioned). It’s a policy change driven by national security/economic tactics, and many businesses are in the same boat figuring out how to cope. It may be worth joining industry groups or coalitions of small businesses that are voicing concerns. Sometimes collective pressure can lead to adjustments (for example, if the tariff is hitting second-hand/vintage resellers particularly hard, there could be appeals for an exclusion). Also, keep an eye on how long this tariff might last. It was imposed under an emergency order; if diplomatic conditions improve or if there’s a legal challenge, the tariff could be reduced or lifted in the future. Stay updated with the latest from U.S. trade regulators – policies can change with negotiations or political shifts. In the meantime, factor the tariff into your pricing strategy, communicate transparently with your customers, and implement the above measures to legally minimize the impact on your business. By restructuring logistics and being proactive, you can continue serving both Canadian and U.S. markets with as little disruption as possible under the new tariff regime. To better forecast financial impacts and adjust your pricing accordingly, consider using a financial forecasting model to help plan ahead and protect your profit margins.

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