Tariffs and Service: Why Keeping Operations in Canada is Critical

The incoming Trump administration’s proposed tariffs are set to upend global trade dynamics, with electronics manufacturers facing steep levies on goods from China, Mexico, and Canada. These tariffs—an additional 10% on Chinese goods, compounding existing levies and a flat 25% rate on Canadian and Mexican imports—pose a significant challenge for manufacturers that rely on cross-border operations for warranty service, staging, and refurbishment projects. The choice of where to import, stage, and repair products will have a direct and substantial impact on operational costs and profitability. This article outlines the risks of cross-border operations and demonstrates why keeping these activities in Canada is the most strategic move for electronics manufacturers.

The Hidden Costs of Cross-Border Operations

1. Importing into the U.S. Directly from China

Electronics manufacturers often ship products from factories in China directly to the United States. Under the proposed tariffs, Chinese imports will face an additional 10% levy, compounding existing tariffs that average 15% or higher. This significantly increases costs for manufacturers, especially in price-sensitive markets, and erodes profitability across the supply chain.

2. Importing into Canada but Performing Repairs and Refurbishments in the U.S.

Some manufacturers import electronics into Canada for initial distribution but send warranty returns or refurbishments to the U.S. for processing. This decision now incurs dual tariff penalties:

• Initial Import Tariffs: Goods made in China shipped to the U.S. for repairs or refurbishment will face the same compounded tariffs as direct imports.
• Return Logistics Costs: Finished goods crossing borders again for re-importation add unnecessary expenses and complexities.

These compounded costs make cross-border operations far more expensive than domestic alternatives.

The Advantages of Keeping Operations in Canada

1. Avoid Tariff Penalties

• Protect Margins: Eliminate compounded import taxes for repairs or staging in the U.S.
• Simplify Operations: Avoid navigating complex customs regulations and tariff compliance.

2. Leverage Canada’s Economic Environment

• Lower Labor and Logistics Costs: Operations in Canada become more affordable relative to the U.S., improving cost-efficiency.
• Resilience to Currency Fluctuations: Domestic operations eliminate exchange-rate risks tied to cross-border shipping.

3. Ensure Faster and More Reliable Service

• Streamlined Turnaround Times: Avoid customs bottlenecks and ensure faster repairs and refurbishment for customers.
• Enhanced Reliability: Remove variables like border delays or shifting trade policies that disrupt cross-border workflows.

The Risks of Ignoring This Shift

• Skyrocketing Costs: Tariffs on Chinese imports, combined with cross-border fees, will devastate margins for staging and repair operations conducted in the U.S.
• Operational Inefficiency: Cross-border processes introduce unnecessary complexity and risk compliance issues.
• Reputational Damage: Slower turnaround times and higher costs erode customer and dealer trust, making it harder to compete in a market where efficiency is key.

A Better Path Forward: Turn Tariffs into an Advantage

Keeping operations in Canada is no longer just an option—it’s a strategic necessity. By avoiding tariffs, leveraging favorable exchange rates, and ensuring faster service, manufacturers can turn these challenges into a competitive edge.

Microland: Your Trusted Partner in Canada

At Microland Technical Services, we specialize in helping electronics manufacturers navigate the complexities of warranty service, staging, and refurbishment in Canada. Here’s how we can help you succeed:

• Expertise You Can Trust: With over 30 years of experience, we are Canada’s leading partner for electronics repair and refurbishment.
• Tariff-Savvy Solutions: Our operations are designed to help you avoid cross-border tariffs while delivering exceptional service.
• A Proven Track Record: From staging projects to warranty services, our tailored solutions deliver efficiency, reliability, and cost savings.