How Apparel Importers Can Work with a Customs Broker in Canada to Manage Tariff Risk

Apparel Giant’s Tariff Strategy Holds Lessons for Canadian Importers

PVH Corp., the retail powerhouse behind Calvin Klein and Tommy Hilfiger, recently disclosed plans to offset 60% of its tariff impact in 2026, up from 30% in 2025. While the company operates globally, its approach to managing duty costs offers valuable insights for mid-market apparel importers bringing goods into Canada. Working with an experienced customs broker in Canada can help businesses implement similar mitigation strategies tailored to CBSA requirements and Canadian trade regulations.

The retail giant expects to face $195 million in gross tariff costs this year. By sourcing from countries with preferential trade agreements, reclassifying products under more favorable HS codes, and optimizing their supply chain routing, PVH aims to reduce the net financial impact significantly. Canadian importers face similar pressures, particularly as global trade tensions create uncertainty around duty rates and country-of-origin rules.

Understanding Tariff Mitigation in the Canadian Context

For importers clearing goods through the Canada Border Services Agency (CBSA), tariff mitigation isn’t just about absorbing costs. It requires a proactive approach to classification, valuation, and trade agreement utilization. The recent shift to CARM (CBSA Assessment and Revenue Management) has made accurate duty management even more critical, as errors now carry heightened financial and compliance risks.

Key mitigation strategies include:

• Verifying country of origin to claim preferential tariff treatment under CUSMA, CETA, or CPTPP
• Ensuring accurate HS code classification to avoid overpaying duties
• Leveraging duty drawback programs for re-exported goods
• Implementing advance rulings to lock in tariff treatment before shipments arrive

PVH’s plan to achieve 75% mitigation by 2027 reflects the kind of long-term planning that Canadian importers should adopt. This isn’t a one-time exercise but an ongoing process of customs compliance optimization.

The Role of Professional Customs Brokerage

PVH employs dedicated supply chain teams to manage its tariff exposure. Most mid-market Canadian importers don’t have that luxury. This is where partnering with a knowledgeable customs broker becomes essential.

A qualified broker does more than file B3 entries. They analyze your product mix, identify opportunities for duty savings, and ensure your classifications align with CBSA expectations. With apparel and textiles, where classification can vary based on fabric content, construction method, and end use, even small classification adjustments can yield significant savings.

For example, a knit shirt classified under HS 6109 may face different duty rates than a woven shirt under HS 6205, depending on fiber content and country of origin. Misclassification not only costs money but also triggers CBSA audits under CARM, where importers bear full responsibility for accuracy.

Supply Chain Routing and Origin Planning

PVH’s strategy includes shifting production to countries with favorable trade agreements. Canadian importers can apply this logic by evaluating their supplier base against Canada’s FTA network. Apparel from Mexico qualifies for duty-free treatment under CUSMA, provided it meets rules of origin. Similarly, EU-origin garments benefit from CETA preferences.

However, claiming preferential treatment requires proper documentation. Importers must obtain and retain certificates of origin, commercial invoices showing qualifying transactions, and supporting records that prove goods meet accumulation and transformation requirements. A customs broker experienced in trade agreement compliance ensures these documents are in order before goods arrive at the border.

HS Code Classification as a Cost Control Tool

PVH’s mention of reclassification highlights an often-overlooked opportunity. Many importers rely on supplier-provided HS codes without verification. This is risky. CBSA holds the importer of record responsible for classification accuracy, regardless of what a foreign vendor specifies on the commercial invoice.

Using tools like CanFlow’s HS classification service, importers can validate codes before the first shipment. For ongoing imports, periodic classification reviews help identify code changes driven by product evolution or tariff schedule updates.

Apparel classification is particularly nuanced. A jacket with a removable liner might shift between categories based on how CBSA interprets “primary function.” Sweaters face different treatment than pullovers. These distinctions matter when duty rates vary from 0% to 18% depending on the code and origin.

Integrating Freight Strategy with Duty Planning

Tariff mitigation extends beyond the customs entry. Freight routing decisions affect landed costs just as much as duty rates. Consolidating shipments, choosing between courier and traditional commercial clearance, and timing entries to align with cash flow all factor into total cost management.

Working with a broker who also provides freight forwarding services creates coordination opportunities. For instance, a shipment that qualifies for de minimis treatment (currently CAD $150 for duties, $40 for GST/HST) might be split to maximize exemptions, or consolidated to improve freight economics while accepting duty liability. These trade-offs require visibility across both customs and logistics.

CARM Compliance and Record-Keeping

Under CARM, CBSA can assess or reassess entries up to four years after release. This extended audit window makes record retention and entry accuracy non-negotiable. Importers must maintain documentation that supports every declared value, classification, and origin claim.

For companies following PVH’s model of aggressive tariff mitigation, this means meticulous record-keeping. Any duty relief claimed must be defensible with contemporaneous documentation. A broker who understands CARM reporting requirements helps structure internal processes to survive CBSA scrutiny.

Taking Action on Tariff Costs

PVH’s public commitment to offsetting 60% of tariff impact in 2026 demonstrates that even under pressure, strategic importers can control costs. Canadian apparel importers face a similar imperative. Duty expenses won’t disappear, but with the right expertise and tools, they become manageable.

The difference between absorbing full tariff costs and implementing a meaningful mitigation strategy often comes down to who handles your customs clearance. A broker who treats every entry as a compliance exercise will ensure goods clear the border. A broker who treats entries as opportunities for cost optimization will help your business compete.

If your current customs process treats tariffs as a fixed cost rather than a variable to be managed, it’s time for a review. Contact CanFlow Global at /en/contact/ to discuss how our team can help reduce your duty exposure while maintaining full CBSA compliance.

Source: Supply Chain Dive