5 Steps To Handle Tariffs on Shopify Without Surprise Costs

Written by:

Harry Chu|Last updated: November 7, 2026

Shopify tariffs thumbnail without background

Tariffs can make a profitable Shopify product much less attractive to sell. A supplier's price might stay the same, but import duties, customs fees, and changing trade policies can push up the cost of getting that product to your warehouse or your customer's door. If you don't account for these expenses early, you could end up absorbing unexpected costs or asking customers to pay additional charges before their orders are released.

Here are five practical ways to handle tariffs on Shopify while keeping your costs predictable and your customers informed.

Quick Recap

Calculate landed costs, including product costs, shipping, import duties, and customs fees, before setting product prices.
Decide whether to absorb import duties or collect them from customers at checkout based on your margins and target markets.
Review suppliers, sourcing countries, and fulfillment locations to find more cost-effective shipping arrangements without violating country-of-origin rules.
Use accurate product information and compatible DDP shipping arrangements to reduce unexpected customs charges for customers.
Monitor tariff policy changes and track product-level profitability to catch rising costs before they significantly affect your margins.

In this blog:

1. Calculate Tariffs and Your True Landed Costs
2. Decide Who Pays Import Duties: Your Business or Your Customers
3. Optimize Suppliers and Shipping to Manage Tariff Costs
4. Configure Shopify to Collect Duties and Import Taxes
5. See What Tariffs Do to Your Net Profit
6. FAQs ABout Shopify Tariffs

1. Calculate Tariffs and Your True Landed Costs

Before changing your product prices or shipping strategy, calculate how much it actually costs to get each product from your supplier to its destination. A supplier's quoted price rarely represents the full cost of selling that product, especially when international shipments are involved.

Start by identifying every import-related expense.

Your landed cost should account for the expenses involved in purchasing and importing inventory, including:

Product cost: The amount you pay your manufacturer or supplier.
International freight and insurance: The cost of transporting products from the supplier to your warehouse or fulfillment location.
Import duties and tariffs: Charges imposed by the destination country's customs authority based on the product's classification, origin, customs value, and applicable trade rules.
Customs brokerage and handling fees: Charges from carriers or customs brokers for processing shipments.
Other import-related expenses: Inspection, processing, and other applicable fees.

A basic landed cost formula is:

Landed Cost = Product Cost + Inbound Shipping + Insurance + Import Duties + Customs and Handling Fees

For example, suppose you import a product that costs $20 per unit. Your inbound shipping costs $5, and customs-related fees add another $2. If a 15% tariff applies to a simplified $20 customs value, the additional duty is $3.

Cost component	Before tariff	After tariff
Product cost	$20	$20
Inbound shipping	$5	$5
Customs and handling fees	$2	$2
Import tariff	$0	$3
Total landed cost	$27	$30

In this example, the tariff increases your landed cost by $3 per unit. If you sell 500 units, that's an additional $1,500 in costs.

The example uses a simplified customs value. Actual tariff calculations may use different valuation rules depending on the destination and product.

Don't confuse tariffs with other customs charges. A tariff or customs duty is imposed by the importing government, while a carrier's brokerage or disbursement fee is a separate service charge. Import taxes, such as VAT or GST, are also distinct from customs duties.

For more accurate estimates, verify the product's HS code, country of origin, customs value, and destination-specific tariff rate. Don't rely solely on your supplier's quoted shipping price or a generic tariff percentage.

Once you know your true landed cost, you can calculate whether your current selling price still leaves enough room for profit.

2. Decide Who Pays Import Duties: Your Business or Your Customers

After calculating the potential duties, decide whether your business will absorb them or collect them from customers. This decision affects your product pricing, checkout experience, and shipping arrangements.

There are two common approaches.

Absorb Duties Into Your Product Prices

With this approach, your business covers import duties and accounts for them when setting product prices. Customers see a more predictable price and are less likely to face unexpected customs charges when their orders arrive.

For example, if tariffs increase your landed cost by $3 per unit, you can adjust your product price to account for that increase rather than displaying an additional duty charge at checkout.

This approach works well when:

You want to offer a straightforward checkout experience.
Your target customers expect shipping and import costs to be included.
You have enough pricing flexibility to absorb or pass on additional costs.
You use Delivered Duty Paid (DDP) shipping arrangements.

However, including duties in your product price doesn't automatically protect your margins. You still need to account for the actual import costs and review your pricing whenever tariff rates change.

Collect Duties From Customers at Checkout

Alternatively, you can calculate and collect estimated duties and import taxes during checkout. Customers see these charges before placing an order, rather than receiving an unexpected payment request when the package arrives.

This approach is useful when:

You sell to multiple international markets with different tariff rates.
Import duties vary significantly by product or destination.
You want to keep product prices consistent across markets.
Your shipping carrier supports DDP fulfillment.

The main trade-off is that additional checkout charges can increase the total purchase price and potentially discourage price-sensitive customers.

Understand DDP vs. DAP Before Choosing

Your shipping terms determine who is responsible for paying import charges and when they are collected.

Shipping term	Who pays import duties?	When are they paid?
DDP (Delivered Duty Paid)	Seller	Before or during shipment, with the seller responsible for import costs
DAP (Delivered at Place)	Buyer	When the shipment arrives and customs charges are collected

Under DDP, the seller takes responsibility for import duties and related delivery costs. You can collect estimated duties from customers at checkout and use the appropriate DDP shipping arrangement to prevent them from being charged again.

Under DAP, the buyer is responsible for import duties and applicable taxes when the shipment reaches the destination. If you use this arrangement, communicate the possibility of additional charges clearly before customers place their orders.

For dropshipping stores, this distinction is particularly important. If your overseas supplier ships directly to customers, confirm whether the supplier offers DDP shipping or whether customers will be responsible for duties on delivery. Don't assume that your supplier's standard shipping service includes import charges.

3. Optimize Suppliers and Shipping to Manage Tariff Costs

Here are several ways to approach this.

Diversify Your Supplier Base

Relying on a single supplier or manufacturing country can expose your store to changes in tariffs affecting that origin.

Consider evaluating alternative suppliers in other countries. Compare their product prices, manufacturing capabilities, quality, shipping costs, and applicable import duties before making a decision.

However, don't assume that sourcing from a different country automatically means lower tariffs. Customs authorities generally determine a product's origin based on where it was manufactured or underwent the required substantial transformation, not simply where it was shipped from.

Changing the shipping route or routing goods through another country does not automatically change their country of origin or eliminate applicable duties.

Consider Domestic or Regional Fulfillment

If you sell consistently in a particular market, storing inventory closer to your customers may reduce repeated cross-border shipping and improve delivery times.

For example, a Shopify merchant selling primarily to US customers could compare the economics of importing products in bulk into a US warehouse against shipping individual orders directly from overseas suppliers.

Domestic fulfillment can help with:

Reducing repeated international shipping costs.
Making delivery times more predictable.
Simplifying the customer experience.
Reducing the number of individual cross-border shipments.

However, importing inventory in bulk may still trigger duties when the goods first enter the destination country. You should compare the total landed cost of bulk imports, warehousing, and domestic fulfillment against direct international shipping before switching.

Negotiate With Suppliers and Shipping Partners

Your supplier may be willing to adjust pricing, shipping arrangements, or order quantities to help manage rising import costs.

Consider discussing:

Bulk purchasing discounts to offset higher landed costs.
Alternative production or sourcing arrangements.
DDP shipping options and the costs included in the quote.
More transparent breakdowns of freight, insurance, and customs-related expenses.
Responsibility for additional charges when a shipment's declared information is incorrect.

Ask suppliers to clarify whether their quoted prices include import duties, customs clearance, and delivery to your destination. A low product price can become expensive if important shipping and import costs are excluded.

4. Configure Shopify to Collect Duties and Import Taxes

Shopify provides built-in tools that allow eligible merchants to calculate and collect estimated duties and import taxes during checkout. Setting these up correctly helps customers understand the full cost of their orders before purchasing.

Start with three important product details:

HS codes: Customs classification codes used to identify products and determine applicable duties.
Country of origin: The country where the product was manufactured or underwent the relevant origin-determining process.
Product value: The declared value used for customs calculations, taking applicable valuation rules into account.

Accurate product information helps Shopify estimate duties more reliably. If an HS code is missing, Shopify may use the product description and category instead, which can result in less accurate calculations.

Next, review your duty collection settings under Settings > Taxes and duties in your Shopify admin.

Eligible merchants can activate duties and import tax collection, select the markets where they want to collect these charges, and decide how duties appear at checkout:

Show as line item: Customers see duties as a separate charge and pay them during checkout.
Duties included in price: Your business covers the duties rather than adding them to the customer's checkout total.

Before activating the feature, check whether your store meets Shopify's requirements. These include having HS codes assigned to products, not using Shopify Fulfillment Network, and using shipping carriers that support DDP labels when purchasing shipping labels through Shopify.

There are also a few limitations worth knowing:

Shopify's duty and import tax calculations are estimates, not guarantees of the final amount charged by customs.
Brokerage, handling, and disbursement fees aren't included in Shopify's duty calculations.
Not all shipping carriers support DDP labels for every destination.
If duties are collected at checkout, you need to use the appropriate DDP shipping arrangement. Using a standard DAP label can result in customers being charged duties again upon delivery.

After enabling duty collection, check your order details to confirm that duties were collected and make sure the commercial invoice matches the product information used during checkout.

For a detailed walkthrough of eligibility, settings, and shipping requirements, see our guide to How to Set Up Duties and Import Taxes in Shopify.

5. See What Tariffs Do to Your Net Profit

An updated Cost per item fixes your gross margin. It doesn't show what a tariff did to your net profit, which still needs ad spend, shipping labels, the duty collection fee, payment fees and refunds.

Orders sit in Shopify, ad spend in Meta or Google, and landed costs often in a spreadsheet. Until those numbers sit together, you can't see how much tariffs affect net profit. By the time you've merged them by hand, the next rate change may already be live.

That's why we built TrueProfit, the net profit analytics platform for Shopify merchants. It pulls revenue together with COGS, shipping, payment fees, ad spend and custom costs into an accurate, real-time P&L, so you see your true net profit after tariffs. With TrueProfit MCP, you can connect your profit data to ChatGPT or Claude and ask, "Which products lost the most margin since the new tariff rates?"

Product analytics shows net profit and margin for each product, so you spot the SKUs that slipped under target after a tariff change and reprice those first. The real-time P&L then shows whether the new prices covered the tariff across the whole store.

TrueProfit Product Analytics table listing revenue, net profit, units sold, COGS, ad spend and net profit margin for each product

FAQs ABout Shopify Tariffs

How can I find the correct tariff rate for my Shopify products?

Start by identifying your product's HS code, country of origin, and destination market. Use the destination country's official customs tariff database to look up the applicable rate. For complex classifications or products subject to multiple trade measures, consult a licensed customs broker before importing.

Can customs charge additional duties after a customer has placed an order?

Yes. Customs authorities may assess a different amount from the estimate shown at checkout if product information, customs valuation, classification, or applicable tariff rules differ. Policy changes that take effect before import clearance may also affect the final amount, depending on the applicable rules and shipment circumstances.

What happens if a customer refuses to pay import duties?

Under DAP shipping terms, a customer who refuses to pay the required import charges may have their package returned to the sender or abandoned, depending on the carrier and destination country's rules. The merchant may then face return shipping, storage, or disposal costs. Set clear policies for refused international deliveries before accepting orders.

Can I recover import duties when a customer returns an international order?

Potentially. Some customs authorities allow import duty refunds or drawback claims when imported goods are returned or re-exported, but eligibility, documentation, and deadlines vary by country. A normal Shopify order refund does not automatically recover duties already paid to customs. Check the relevant customs authority's refund procedures before promising customers a full reimbursement of import charges.

Harry Chu

Founder of TrueProfit & eCommerce Profitability Expert

Harry Chu

Founder of TrueProfit & eCommerce Profitability Expert

Harry Chu is the Founder of TrueProfit, a net profit tracking solution designed to help Shopify merchants gain real-time insights into their actual profits. With 11+ years of experience in eCommerce and technology, his expertise in profit analytics, cost tracking, and data-driven decision-making has made him a trusted voice for thousands of Shopify merchants.

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