The Trump administration isn’t backing down from an executive order eliminating the duty-free de minimis exemption on shipments of imports valued at or under $800 USD—which is more terrible news for an anemic Canadian economy, according to business trade experts.
The tariff exemption on small-value goods entering the U.S. expires for all countries tomorrow. It will have a near-immediate inflationary impact for Canadian consumers.
“So as a Canadian consumer…we will pay more for the tremendous wide variety of goods, and not because it’s a Canadian company importing it, but because it had to touch U.S. soil on the way here,” David Nagy, founder of eCommerce Canada and veteran entrepreneur, told The Hub.
The “de minimis” (Latin for trifling, or of little importance) trade exemption, enacted in 1938, allowed aggregate low-value shipments to enter the U.S. duty-free.
U.S. President Donald Trump originally proposed suspending the de minimis for all countries in an executive order back in February, citing combatting drug and human trafficking, but held off until adequate systems at customs were in place.
“We don’t have the port capacity here,” Nagy added, explaining that many Canadian sellers currently import large shipments in divided batches through larger logistic channels in the U.S., avoiding tariffs by taking advantage of the now-expiring exemption on shipments of $800 USD or less.
“We will feel [it in] certain industries very, very quickly. Consumable goods…So if anything’s coming through grocery channels and stuff like that, it almost immediately has to get more expensive,” Nagy said.
Canadian businesses that are part of the $4.8 trillion USD worldwide e-commerce market may be the hardest hit, however.
Simon Gaudreault, the Canadian Federation of Independent Business chief economist and VP of research, told The Hub that an ongoing survey, that’s so far polled 2,400 CFIB members, has indicated the elimination of the de minimis as the most concerning tariff from the Trump administration so far for independent Canadian businesses, despite not yet taking effect.
“So we’ve listed close to a dozen different types of tariffs and measures that have been put in place since the start of the trade war…the second most impactful [after Canadian retaliatory tariffs] was the upcoming end of the de minimis,” Gaudreault said.
Even small businesses shipping Canadian products still protected under the Canada-United States-Mexico Agreement (CUSMA), which de minimis still applies to, will incur added costs. For many small exporters, the most significant challenge won’t necessarily be tariffs, but rather the administrative burden of customs compliance. Businesses that previously operated with minimal paperwork will now need to navigate complex customs procedures.
“[For small Canadian businesses] to prepare that documentation and get it cleared into the U.S. on small volume shipments, especially one-offs like [business to customer] retailers that are going to sell into the United States right now, it may just not be worth it at all,” Nagy said. “You look at your profit margin, the amount of time, and the amount of like, preparing the manifest, submitting it to brokerages.”
While some Canadian goods may qualify for duty-free treatment under CUSMA, demonstrating compliance requires navigating complex rules of origin requirements within CUSMA that are over 200 pages long.
Stallion Express, and other eCommerce shipping businesses in Canada, have also added brokerage fees for products shipped to the U.S.
Generative AI assisted in the production of this story.
Graeme Gordon is The Hub's Senior Editor and Podcast Producer. He has worked as a journalist contributing to a variety of publications, including CBC,…
