Small businesses north of the border are bracing for the impact of President Donald Trump’s latest move to tighten trade rules. The de minimis exemption allowed small businesses to ship small packages to the US duty-free if it was under a certain value. But through an executive order signed by Trump, that exemption ended on Friday. Many small companies in Canada said they now face going out of business.
The de minimis exemption allowed packages worth less than $800 to enter the United States duty-free. For Americans, ordering products from outside the US, they didn’t have to concern themselves with duties or other fees. For small businesses worldwide, it gave easy access to the American market. Canadian small companies, being so close, reaped the benefit. Now they’re faced with a 35% duty, or tariff, on packages worth more than $100 U.S. Corrinne Pohlman is with the Canadian Federation of Independent Business.
“We know that about a third of our members, which is probably very similar to the small business population overall, are using the $800 de minimis to send products to their customers in the United States,” Pohlman said. “So, we’ve been receiving many phone calls over the course of the last couple of weeks from businesses very worried about what their options might be and how they may be able to address this.”
It means big changes for those small companies, and big price increases for their American customers. Cal Green has a small clothing company based in Ottawa, and about 25% of his business is from American customers.
“The duty, the tariff, the brokerage fees and shipping are going to be included in the price for US customers to be transparent,” Green said. That’s really all I can do at this point. As a small business, I can’t afford to eat those costs.’
Some said they will no longer ship to the U.S., knowing that their customers there won’t pay another 35%. Corinne Pohlman said the de minimis exemption was used more often than people know.
“It’s an important source of income for a lot of small companies who now have to rethink how they’re going to deal with their US customers,” Pohlman said.
For many owners, it could be a make-or-break scenario. Cara Sheppard has a small hand-crafted operation called Nestling Keepsakes, she said, as much as 70% of her business comes from south of the border.
“It’s a little heartbreaking, honestly, because I love what I do, and I love my customers. And this is an existential problem for my business,” Sheppard said. “I don’t know if I can survive on just Canadian business. We have a much smaller population. I fill a very niche, kind of expensive product, and if I can’t make it work, I’m going to have to do something else.”
Sheppard said she will absorb the costs of shipping the existing orders she has to the U.S. But many others have decided to suspend shipping to the U.S. There are solutions, such as confirming that your products are compliant with the Canada-US-Mexico Agreement. But according to Pohlman, it’s not an easy process.
“But it’s an important thing to note that, yes, if your product is manufactured or produced in Canada or the US or Mexico, it is considered CUSMA compliant and therefore it should have no duties to your customers going into the United States,” Sheppard said. “But to become CUSMA-compliant certified is not a simple process. There are quite a few things you have to consider; some are going to be very obvious. But you’re going to have to get certified for every product that you send into the United States, and the paperwork can be quite lengthy and complicated.”
At least two dozen countries have now suspended or limited postal service to the U.S. Canada Post said it will use a third-party service to process the fees on mailed packages. That service will collect duties from customers and send them directly to U.S. Customs and Border Protection.
