August 14, 2025
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By Atul Oka, Senior Director of Strategy and Business Development, DUKE Heights BIA
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The U.S. government is moving to eliminate the de minimis exemption - a trade rule that has allowed Canadian businesses to send low-value shipments (under US$800) to American customers without paying duties or dealing with complex customs paperwork.
This rule has been a major advantage for Canadian entrepreneurs, especially in e-commerce where it has allowed Canadian businesses and entrepreneurs to compete evenly with American firms as it helped to, sped up deliveries, and reduce the complexity of cross-border trade.
Why This Change Matters
The de minimis exemption has been a growth engine for Canadian small and medium-sized businesses selling to the U.S. market.
It has historically allowed for:
- Duty-free sales on low-value shipments. (Less than $800 in value)
- Simpler logistics without extensive customs forms.
- Faster delivery times as a result of the simplified process.
- Direct-to-consumer growth.
Without it, Canadian businesses which depend on the U.S consumer, may find doing business in the U.S. more expensive and complicated.
What to Expect
- Higher Costs for U.S. Customers
Products that were once duty-free will now face tariffs, taxes, and brokerage fees. Businesses will need to decide whether to absorb these costs (cutting into margins) or pass them on. Both of which are expected to negatively impact demand.
- More Administrative Work
Shipments will require proper customs entry, detailed documentation, and accurate Harmonized System (HS) codes. For many small businesses, this will mean learning a new process or outsourcing to a customs broker.
- Potential Shipping Delays
With more shipments requiring clearance, processing times could slow down. This may affect customer satisfaction and repeat sales.
- Supply Chain Cost Pressures
If you import components from abroad and sell finished goods to the U.S., you could face higher input costs which will cascade into your retail pricing.
Strategies to Adapt and Stay Competitive
While this is a significant potential challenge, Canadian entrepreneurs have always been resourceful. Here are some steps to consider to help manage the impact:
- Reassess Pricing and Fulfillment Models
- Calculate your new landed costs for U.S. shipments, factoring in duties and brokerage fees. (See if it still makes sense.)
- Explore bulk shipping to a U.S.-based warehouse and fulfilling orders domestically to reduce per-order costs and customs delays.
- Strengthen Customs and Compliance Capabilities
- Get familiar with your product’s HS codes and required paperwork.
- Partner with a reputable customs broker or third-party logistics provider to streamline the process.
- Diversify Markets and Supply Chains
- Look beyond the U.S. to markets with more favorable trade agreements.
- Consider shifting sourcing to Canadian or North American suppliers to reduce tariff exposure.
- Communicate Clearly with Customers
- Be transparent about potential cost changes or delivery times.
- Offer accurate landed cost calculations at checkout.
- Update return policies to reflect any increased costs or complexity.
In Conclusion
The removal of the de minimis exemption is a major change in the cross-border trade landscape. It will create hurdles, especially for smaller businesses, but those who adapt quickly by refining pricing strategies, strengthening logistics, and exploring new markets can maintain their competitiveness.
In trade, as in business, change is constant. The key is to respond quickly, plan strategically, and keep customers informed. Those who do will be best positioned to navigate this new environment and perhaps even find new opportunities within it.
