If the customs form is marked as 'returned merchandise' than you shouldn't have to pay duty since the package did originate in the US. At least that is how it works in Canada so it should work similar in the US.
However, the buyer in Canada is going to have to pay quite a bit in import fees in order to pick up the package so that it can be returned to you. Once the package was sent back they would have to put in a claim with Canada customs to show that the item had been returned so that they get the majority of their fees back. I haven't ever had to do that so I don't know how quick the process is.
If they don't go to the post office to pay the fees and pick up the parcel, then it would eventually be returned to you. However, with something worth that much, I would be uncomfortable about doing it that way as I'm not sure if there is a guarantee that the parcel will be returned and/or what happens if it gets lost. In other words, I'm not sure what to suggest. Note that the buyer also forgoes their buyer protection if they don't go pick up the parcel so they would not be able to file an inr if you did not send the item they ordered..so that might make them hesitant to do it that way.
If they do send it back with Canada Post, they should use Xpresspost USA as that is the only Canada Post service to the US that has a signature option. The label will have to be a Canada Post label which may be able to be printed through Shippo if you want to sign up with them. I don't know if other services in the US will allow you to print a CP label. If you want to figure out the cost and send the money to the buyer so that they can purchase the label, you can do so at the CP site.
https://www.canadapost.ca/cpotools/apps/far/business/findARate?execution=e2s1
