Confused About Tariffs? Information for Canadian, American and internationl customers

Recently, PWRS/NARC has been receiving an increased number of telephone calls and emails as a result of the recent back-and-forth between Canada and the United States about tariffs. It is clear – and understandable – that all this tariff storm has people concerned and/or confused about what it all means for you, our customers. So, the purpose of this email is to answer the questions we’ve been receiving about the implications of this recent tariff hubbub and provide complete transparency to you about the implications of the escalated trade “friction” between the two countries.

The information in this email is broken down into three groups: ALL customers, Canadian and other NON-US-domiciled customers, and US-domiciled customers.

First, for ALL customers:

1. The SINGLE FACTOR the drives the level of tariff charged on goods entering the US and Canada is the COUNTRY WHERE THE PRODUCT IS MANUFACTURED, NOT where the company that is selling the product is located.

2. ONLY GOODS that cross INTO THE UNITED STATES (at some time) are subject to US tariffs.

3. The applicable US tariff on model train and hobby goods is 12.5% for products manufactured in China and Vietnam (where the vast majority of these products purchased in North America are manufactured).

4. While Canada has implemented new tariffs on goods manufactured in US that are imported into Canada from the US, these tariffs ARE NOT BEING CHARGED on model train and other hobby items (such as trains, tools, glue, paint, lubricants, batteries, books, calendars and DVDs). This exclusion applies to goods such as those made by Micro-Trains, Woodland Scenics, and decoders that are MADE in the US.

For CANADIAN and other NON-US-domiciled customers:

1. For NARC products, there is NO US TARIFF charged on these products, since these products come directly from Hong Kong, China into British Columbia, Canada and are shipped to customers from Canada, NEVER crossing into the US.

2. For products from other companies domiciled in the US whose products are NOT PRODUCED in the US (such as Atlas and Athearn, who source their products from East Asia, typically China or Vietnam), their retail price INCLUDES a cost for the US tariffs, which is imbedded in their price. But there is NO ADDITIONAL cost to customers for added Canadian tariffs on US goods, since these goods were NOT PRODUCED in the US.

3. For model train products that are MANUFACTURED in the US, PWRS customers WILL NOT be charged a Canadian import tariff, as these goods enjoy a Canadian tariff exclusion.

For US-domiciled customers:

1. For NARC products, US customers are charged a tariff equal to 12.5% of the purchase price which is added to the purchase invoice and which PWRS pays at the time the order information is entered into the US Customs website to register the products’ future entry into the US. THERE IS NO ADDITIONAL TARIFF on NARC products entering the US due to the fact that products are being shipped from Canada, because it is the COUNTRY OF MANUFACTURE, NOT the COUNTRY OF SHPMENT that determines US tariff charges.

2. For products from other companies domiciled in the US whose products are NOT PRODUCED in the US (such as Atlas and Athearn, who source their products from East Asia, typically China or Vietnam), their retail price INCLUDES a cost for the 12.5% US tariffs, which was paid by the company at the time the goods entered the US and which is imbedded in their price.

3. Comparing NARC and Non-NARC products: generally, we have found that the total cost of NARC products with a 12.5% tariff added is less than the price of products of comparable quality from other manufacturers with the US tariff imbedded in their prices.

4. For products from companies that produce their products in the US such as Micro-Trains, Woodland Scenics and some decoders, US customers ARE NOT CHARGED A US TARIFF, since these goods are returning to US (and are not “imported” into the US).

It’s easy to see why the current environment created by US and Canadian tariffs is confusing. Here, we think, are the big “headlines”:

1. If a product produced in China or Vietnam NEVER CROSSED A US BORDER, non-US customers will not pay a US or Canadian tariff – which applies ONLY to companies NOT DOMICILED in the US.

2. If a product produced in China or Vietnam CROSSED A US BORDER at ANY TIME, ALL customers will pay a US tariff (12.5% of the product’s price) which is either added to the sales price (for NARC products) or imbedded in the price (if produced by other US-based companies).

3. Canada has granted an exclusion to its tariffs on US-made goods for model train and other hobby items, so US-made goods purchased from PWRS by non-US customers pay NO TARIFFS.

4. US customers do NOT PAY A US TARIFF on products produced in the US, so such products purchased from PWRS are NOT charged a tariff.

Please see the Table below as another reference for determining tariffs on model train products:

You can determine the Country of Origin for any product in the PWRS online (PORTERS) system by searching the product and then clicking on the link to the specific product to access the detailed product page. The Country of Origin is displayed in the line DIRECTLY BELOW THE PRICE of the item.

PWRS also provides information regarding the current US tariff level by Country of Origin, which can be found below:

(Note that we make every effort to keep tariff information up-to-date.)  

As always, we appreciate your past patronage of PWRS as a source of model train products generally and of NARC products. And we look forward to continuing to be your source of high-quality model train products while providing excellent customer service and value.