Clothing Import Duties in Canada: What Fashion Founders Need to Know Before They Order

The moment a Canadian fashion brand decides to manufacture offshore, a new set of costs enters the picture that most founders don't fully account for until the invoice arrives. Clothing import duties in Canada are real, they are significant, and they vary based on where your goods are made, what they are made of, and what agreements are in place between Canada and your manufacturing country.

This guide covers what you actually need to know  clearly, without the jargon.

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What Are Clothing Import Duties?

Import duties are taxes charged by the Canadian government when goods cross the border from another country. For clothing and apparel, these are calculated as a percentage of the declared value of the goods. They are paid before your shipment is released by the Canada Border Services Agency (CBSA).

Duties are separate from taxes. You will pay both.

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Standard Duty Rates for Clothing in Canada

For most clothing imported into Canada from countries without a free trade agreement, the standard Most Favoured Nation (MFN) duty rate is 17% to 18% of the transaction value of the goods. On top of that, a federal Goods and Services Tax (GST) of 5% applies to the total value including duties.

So if you are importing a $10,000 CAD order of garments at the standard rate, you are looking at approximately $1,700 to $1,800 in duties plus $585 to $590 in GST  bringing your landed cost significantly above your production invoice.

Fabrics, as a general rule, are duty-free with a few exceptions. Most baby clothing is also duty-free. But finished garments are typically dutiable at 17% or 18%.

You can use the CBSA duty estimator tool to get a rough calculation before committing to an order.

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Free Trade Agreements  How to Pay Less

Canada has active free trade agreements with a number of countries that can significantly reduce or eliminate import duties on qualifying apparel. The two most relevant for fashion brands are:

CUSMA (Canada-United States-Mexico Agreement) If your garments are produced in the United States or Mexico and meet the rules of origin requirements, duties can be reduced to zero. Rules of origin typically require that the fabric or yarn used in production originates within the CUSMA region.

CPTPP (Comprehensive and Progressive Agreement for Trans-Pacific Partnership) This covers countries including Vietnam, Malaysia, and Peru among others. Qualifying goods can attract preferential or zero duty rates. Vietnam in particular is a significant apparel manufacturing country and a source many Canadian brands use  CPTPP can make production there considerably more cost-effective.

Tariff Preference Levels (TPL) Four of Canada's free trade agreements include a provision called Tariff Preference Level, which allows specific quantities of certain yarns, fabrics, and apparel traded between parties to be imported at a preferential rate, even if they don't fully meet the standard rules of origin requirements.

If you are producing in a country that has an FTA with Canada, it is worth speaking to a customs broker before you place your order to confirm whether your goods qualify. Missing this step is one of the most common ways founders overpay on duties.

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HS Codes  The Number That Determines Everything

Every garment imported into Canada needs to be classified under a 10-digit Harmonized System (HS) code. The final four digits are Canada-specific and help determine tariff treatment and customs reporting detail. If your entry goes in under the wrong ten-digit line, the result may be underpaid duty, overpaid duty, or a mismatch between your tariff code and your origin claim.

The correct HS code depends on garment type, fabric construction, and fibre content  not the product name on the invoice. "Women's top" is not a tariff classification. Knit vs. woven, fibre content, and construction method are what determine the code  and the rate.

Your manufacturer or supplier may provide a code, but verifying it independently or through a customs broker before your shipment arrives is strongly recommended.

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What You Need to Prepare Before Your Shipment

As the importer of record, you are responsible for the accuracy and completeness of the import declaration, as well as payment of applicable duties and taxes. Shipments may be examined or audited by the CBSA, and you are responsible for any costs incurred during this process. Records of imported goods must be kept for six years following importation.

Before your first offshore production order ships, make sure you have:

• Confirmed HS codes for every style in the order
• Determined which free trade agreement, if any, applies to your country of manufacture
• Gathered a commercial invoice with accurate product descriptions, unit values, and country of origin
• Confirmed whether your goods include any restricted materials (certain textiles require additional labelling or permits)
• Factored duties and GST into your landed cost per unit before finalising your retail price

The Government of Canada's official textile and clothing import page is the authoritative source for current tariff preference levels and labelling requirements.

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Canadian Labelling Requirements for Imported Clothing

All garments imported into Canada must meet labelling requirements under the Textile Labelling Act. This means every garment needs a label that includes fibre content, country of origin, dealer identity, and care instructions in both English and French.

Your manufacturer needs to know these requirements before production begins  not after the goods are finished. Relabelling after the fact is expensive and avoidable. Build the label specs into your tech pack so your manufacturer has everything they need from the start.

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Local vs. Offshore  How Duties Factor Into the Decision

Import duties are one of the factors that make local production in Canada more cost-competitive than it first appears. When you produce domestically, there are no import duties, no customs delays, no broker fees, and no labelling compliance risk. The higher per-unit cost of local production is partially offset by the costs you don't pay.

When offshore production does make sense  typically at higher volumes once your product is proven — the duty calculation becomes a core part of your landed cost model. Many brands we work with do their initial development and sampling locally, then transition to offshore production for larger runs once they have confirmed demand and factored in the full import cost picture. We explain how this works in our guide to clothing manufacturers in Canada.

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Working With a Customs Broker

For first-time importers, a customs broker is worth the cost. They classify your goods correctly, prepare your customs documents, arrange duty payment, and secure release of your shipment. A mistake on classification or origin documentation can delay your shipment by weeks and cost more to fix than the broker fee would have been.

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What WearLab Does

WearLab Inc. helps fashion founders navigate both local production in Canada and offshore manufacturing through vetted global partners. We advise clients on the full cost picture  including duties, lead times, and compliance requirements before they commit to a production country.

If you are deciding whether to produce locally or offshore, or you want to understand the full landed cost of your first production run, book a free intro call and we will walk you through it.

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