Hearth Slashes Costs and Supercharges Profits by Saving on Import Duties and Tariffs
Using the Section 321 Rule and switching to a Canadian 3PL, Hearth is on track to achieve six-figure savings
Company Overview
Hearth is a female-founded company that offers centralized touch screens for the home, featuring personalized planning and management tools aimed at making family organization a breeze.
“With whiteboards and even other family apps, parents — most often, moms — carry the weight of managing and maintaining the organizational system. Kids, and sometimes many partners, don’t contribute. In order to actually lighten the mental load, we need to democratize the planning process across the family unit”
Challenges Faced
Hearth’s touch screens are manufactured in China, and are subject to higher duties and tariffs upon import to the United States due to its product category and origin. These additional costs had a significant impact on the company’s profits.
How We Helped
Leveraging the Section 321 De Minimis Rule (Section 321 Rule), we devised and implemented a plan to reroute Hearth’s touch screens to a 3PL in Canada before shipping them to U.S. customers. This move offers significant financial perks for companies dealing with high-duty and high-tariff Chinese imports. Unlike the U.S., Canada doesn’t slap hefty tariffs on these goods, making it a smart and cost-effective detour.
The Transition
During the transition to the Canadian 3PL, we teamed up closely with Hearth to craft a plan based on their customer promise timelines and incoming inventory. This smart approach helped cut moving costs by rerouting new shipments to Canada while gradually selling off inventory at their U.S. warehouse. In just a few weeks, we had everything sorted—from setting up accounts and integrating with Shopify to receiving inventory—smooth as butter. Throughout it all, our customer-first approach meant we were there every step, handling even the nitty-gritty like getting them set up with non-resident importer status and a tax ID in Canada.
Results Achieved
For Hearth, a high-value product company, the move from their U.S. warehouse in New York to a Canadian partner in Ottawa allowed Hearth to in reap immediate savings from duties and tariffs and cut costs by around $50 per unit sold. This savvy strategy is set to save Hearth over $500,000 in 2024, even after accounting for slightly higher fulfillment costs. The transition was made effortless and speedy, with Hearth benefiting from our expert guidance and support every step of the way, making the switch feel simple.
