The tariff war is colliding with Amazon’s plan for growth in Canada

• Amazon plans to expand fulfillment and same-day delivery in Canada.
• Amazon was already changing some sourcing decisions to avoid tariffs.
• Amazon’s Canadian growth faces competitive pressure from Walmart and other major retailers.

Amazon is doubling down on Canada even as an escalating tariff war adds another complication to one of the company’s significant international markets.

Internal documents reviewed by Business Insider show that Amazon expects package volume in Canada to grow faster, percentage-wise, than in the US over the next several years. Its plans include expanding fulfillment capacity, same-day delivery, and its logistics network in Canada.

Amazon was still laying out those expansion plans in late July, after President Donald Trump announced additional 50% tariffs on certain Canadian imports. An earlier Amazon document from March shows that tariffs were already affecting some of the company’s Canadian supply chain decisions.

The documents provide a rare look at the balancing act facing large retailers as tariffs reshape cross-border commerce. Amazon’s latest forecasts suggest trade tensions haven’t yet derailed its Canadian growth ambitions, even as earlier tariffs prompted some sourcing changes.

Amazon is continuing to invest, betting that faster delivery can help it gain ground on competitors. The internal forecasts are preliminary and subject to change.

In an email to Business Insider, an Amazon spokesperson said the company has invested more than C$65 billion, or about $47 billion, in Canada since 2010 and employs more than 46,000 people at operations sites across the country.

“For nearly 25 years, Amazon has been investing to serve customers and communities across Canada,” the spokesperson said in a statement. “We continue to invest in fast delivery, broad selection and low prices for customers in Canada, and are always exploring new ways to serve them.”

The spokesperson said Amazon is also monitoring the changing trade environment.

“As we navigate the evolving trade policy landscape, our focus remains on delivering value to our customers and innovating on their behalf. Like many multinational companies, we are closely monitoring trade developments, including new tariffs in Canada, to understand any potential impacts,” the spokesperson added.

Tariffs were already affecting Amazon’s supply chain

Amazon was already adjusting parts of its Canadian supply chain because of tariffs before the latest escalation.

A March planning document said Amazon had changed some Canadian direct-import sourcing from the US to China “to avoid tariffs.”

At the time, Amazon said tariffs were having a smaller impact in Canada than in the US because many goods were protected under the US-Mexico-Canada Agreement. Still, the company warned that “the risk of a Canadian recession is higher than usual due to US trade policy uncertainty.”

The trade environment has since deteriorated.

Trump announced an additional 50% tariff on certain Canadian imports on July 20, including some goods that qualify for USMCA protections. The tariffs took effect this month. Canada has announced retaliatory tariffs on US imports beginning Sept. 8, including consumer categories such as appliances and electronics.

Canada’s retaliation could create risks in the other direction for retailers moving goods from the US into Canada.

Amazon’s Remote Fulfillment program, for example, lets third-party sellers sell eligible products on its Canada marketplace while keeping inventory in US warehouses. Those products can cross the border after Canadian customers place an order.

The Amazon spokesperson said the company is closely monitoring the new Canadian tariffs for potential impacts but hasn’t seen them translate into higher prices on its Canadian marketplace so far.

“Prices of products in our Canadian store have not increased outside of normal fluctuations across the millions of items on Amazon, and we continue to meet or beat other retailers’ prices across our vast selection of products,” the spokesperson said.

Competitors are pulling ahead

Amazon has a strong reason to keep investing despite those headwinds: It still sees substantial growth ahead in Canada.

The company expects Canadian package volume to increase by more than 40% in total between 2026 and 2029, with annual growth rates consistently outpacing those in the US.

But Amazon believes faster-moving competitors threaten its ability to capture that growth.

“Amazon Canada faces a critical competitive challenge as major retailers are outpacing our delivery capabilities, putting future growth at risk,” the March document said, citing investments by Walmart, Loblaws, and Best Buy in Canada.

Amazon offered same-day delivery to about 54.5% of Canadian Prime members, according to one of the documents, while competitors could deliver within two to four hours to between 70% and 85% of Canadian households.

Its plans call for more fulfillment capacity, which Amazon projects would allow 63% of Canadian shipments to be fulfilled within 160 miles of customers and 93% within 1,000 miles by 2029.

Walmart has continued raising the pressure. It launched Walmart+ in Canada in June with benefits including unlimited same-day delivery.

Amazon can’t just build everywhere

Amazon’s plans show that expanding in Canada isn’t simply a matter of building more warehouses.

Amazon estimates that third-party last-mile delivery costs roughly half as much as in the US, reducing the financial advantage of bringing more deliveries in-house.

The difference is significant enough to shape where Amazon builds. The company evaluated 12 additional conventional delivery stations in Canada but found they would produce negative five-year paybacks, according to the July document.

It instead shifted those markets toward lower-cost, partner-based delivery models.

The Amazon spokesperson told Business Insider its plans continue to evolve.

“We will announce specific plans and new offerings as they are confirmed,” the spokesperson said.

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