Small businesses that relied on duty-free U.S. shipping wonder if they can survive without it

The end of the de minimis exemption for small package shipments from Canada to the U.S. has left many small businesses in a state of uncertainty and worry. The exemption, which allowed goods under $800 US to enter the U.S. without extra fees, has been eliminated due to a July executive order by U.S. President Donald Trump.

This change means that Canadian small businesses shipping to American customers will now face additional costs and duties of up to $200 US, depending on the country of origin. Many online sellers are concerned that these extra fees will eat into their profits and potentially lead to the closure of their businesses.

Jess Sternberg, the owner of Free Label clothing in Vancouver, has already ceased all shipping to the United States due to the uncertainty and risk involved. She expressed concerns about the impact of these changes on her business, as nearly 45 percent of her sales come from American customers.

On the other hand, Cheekbone Beauty Cosmetics, an Indigenous-owned company based in St. Catharines, Ontario, has decided to absorb the added duties for now due to a surge in Canadian orders in response to Trump’s trade escalation. The company saw an increase in sales from the Buy Canadian movement, giving them some flexibility to cover the additional costs.

The end of the de minimis exemption has been described as a “double-edged sword” by industry experts. While it allowed smaller companies to increase sales to the U.S. without paperwork or duties, its elimination now presents a challenge for businesses that may not be familiar with the rules of origin and customs clearance processes.

Shipping companies like FedEx and Canada Post are adjusting to the changes by implementing new procedures for U.S.-bound packages. However, some e-commerce platforms like Etsy and Ebay have announced that they will not accept shipping label purchases from Canada Post for packages going to the U.S.

Overall, the end of the de minimis exemption is expected to have a significant impact on Canadian small businesses, with some potentially facing closure as a result. Entrepreneurs are now faced with the challenge of adapting to these new regulations and finding ways to navigate the changing landscape of cross-border trade. In a recent market update, industry experts expressed concerns about the potential impact of new regulations on innovation and growth within the sector. One expert noted that these regulations could stifle the lifeblood of the industry, hindering the progress of emerging companies.

“It’ll cap some of that innovation, some of that growth, and that’s the lifeblood [of the] industry. So that’s the challenge,” he said.

The loss of a valuable tool for emerging companies is a significant setback, as it could impede their ability to thrive and compete in the market. Without the freedom to innovate and grow, these companies may struggle to make a mark in the industry.

Overall, the market faces a challenging road ahead as it navigates through these new regulations. It is essential for industry players to adapt and find new ways to foster innovation and growth in order to stay competitive in the ever-evolving market landscape.