Canadian Company Faces Tariffs After Shifting Manufacturing from China

A Canadian company specializing in children’s toy couches, Barumba Play, finds itself grappling with unexpected import tariffs after relocating production to Canada. Previously, Barumba Play had manufactured its products entirely in China, benefiting from tariff exemptions as the couches were classified as children’s toys. However, upon moving production to Canada in 2023, the company encountered an unforeseen challenge.

While most of the manufacturing now takes place domestically, Barumba Play continues to rely on China for one component: cloth slipcovers. Recently, the Canada Border Services Agency (CBSA) reclassified these slipcovers, subjecting them to an 18 percent import duty. The CBSA’s decision came as a surprise to Sara Feldstein, founder of Barumba Play. Prior to relocating manufacturing, Feldstein sought guidance from business advisors and industry experts who indicated no tariff implications for the slipcovers. However, the CBSA’s reclassification now leaves the company facing retroactive tariffs amounting to at least $47,000, with potential costs soaring to $70,000.

The appeals process, which could take close to a year, offers little relief as businesses must pay assessed tariffs upfront, along with interest, before initiating an appeal. This predicament underscores the complexities and challenges faced by businesses navigating tariff regulations. While some argue for pausing tariff collection pending appeal outcomes, others caution against such measures, citing potential abuses of the system. Despite the setbacks, Feldstein remains hopeful for a resolution, maintaining that the slipcovers are integral parts of the toy couches rather than standalone textiles.

As Barumba Play awaits clarity on its tariff status, Feldstein hesitates to expand the business further, emphasizing the need for resolution before committing additional resources.The case of Barumba Play highlights the intricacies of tariff regulations and the importance of thorough preparation when navigating international trade. Despite consultations with experts, unexpected tariff implications can pose significant challenges for businesses operating across borders.

For stakeholders in the international trade community, Barumba Play’s experience serves as a reminder of the potential impact of tariff changes on business operations and expansion plans. As businesses continue to navigate the complexities of global trade, clarity and predictability in tariff regulations remain paramount to fostering a conducive environment for cross-border commerce.