U.S. suspension of de minimis exemption to hit Canadian exporters

Canadian businesses that sell low-value goods to U.S. customers are bracing for new costs and red tape after Washington announced it will suspend its long-standing de minimis exemption for commercial shipments, according to a report from MNP partner Mike Cristea.

Effective Aug. 29, 2025, every shipment entering the U.S., regardless of value, will require full customs documentation and could be subject to duties. Goods that qualify under the Canada-U.S.-Mexico Agreement (CUSMA) will remain duty-free, but businesses will need to prove compliance with the trade pact’s rules of origin.

The de minimis exemption, set under Section 321 of the Tariff Act of 1930, allows imports valued at US$800 or less to enter duty- and tax-free. It was expanded in 2016 to encourage e-commerce, but U.S. officials say the suspension is part of a broader push to curb tariff evasion, counterfeits and illicit imports.

MNP, a Canadian accounting and consulting firm, says the change poses significant challenges for small and medium-sized exporters that lack the infrastructure of larger corporations.

“The de minimis threshold has allowed a frictionless flow of goods across the border,” the firm wrote in a recent report. “Its suspension will add complexity, increase costs and force businesses to make strategic decisions about fulfillment, sourcing and compliance.”

Among those most affected will be online sellers shipping through platforms like Etsy or Shopify, subscription-box companies, drop shippers and B2B exporters of small components. These firms will now face higher landed costs, longer delivery times and complicated return procedures.

Businesses that import parts from outside North America for assembly in Canada are also at risk. Unless their products meet strict CUSMA rules, they could face tariffs of up to 35 per cent when entering the U.S.

To adapt, MNP recommends exporters re-evaluate supply chains to favour CUSMA-compliant inputs, consider bulk shipping and U.S. warehousing and strengthen customs compliance systems. Investments in automation, recordkeeping and trade advisory services could also help avoid delays and penalties.

The firm also urges companies to communicate openly with U.S. customers about potential price increases and delivery changes.

“The suspension introduces new complexity, but it also presents an opportunity for businesses to reassess their cross-border strategies,” the report said.

For many Canadian exporters, the end of the exemption may mean absorbing higher costs or passing them along to American buyers.

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