For Canadian companies that ship low-cost goods to customers in the United States, business as you know has changed.
Effective Aug. 29, 2025, imported goods valued at, or under, US$800, sent through channels other than the international postal network, are subject to all applicable duties and require full customs clearance procedures.
Known as the de minimis threshold, imports into the U.S. in this price range had been exempt of duties and taxes under Section 321 programs, but on July 30, 2025, the Trump administration announced it was suspending the duty-free advantage.
A Latin phrase meaning “of minimal importance,” it refers to a threshold value established by various countries, below which goods can be imported without incurring duties or taxes. This system is designed to simplify customs procedures and alleviate the administrative burden on customs officials, in turn, encouraging small businesses and individuals to engage in international trade.
This policy change will have significant consequences for Canadian companies that have built their U.S. distribution strategies around low-value, cross-border delivery services. Now, small packages sent directly to U.S. buyers will no longer pass through customs without incurring duties, taxes and extra paperwork.
Postal shipments will continue to transit without requiring an entry prepared by U.S. Customs and Border Protection (CBP) until CBP establishes and publishes a new entry process. Nevertheless, these shipments must adhere to a new duty collection framework.
As a result, “exporters can expect higher shipping costs, new compliance burdens and greater risks of shipment delays. This shift will be particularly challenging for sectors that rely on frequent, low-value shipments,” says David Weiner, Export Development Canada’s (EDC) regional vice-president for the U.S.
“Canadian exporters should remain informed and adaptable to maintain speed and ease of service—key expectations for today’s online consumers—which will be harder to maintain without adjusting distribution strategies,” he says.
For further clarification on the duty-free treatment under the Canada-United States-Mexico Agreement (CUSMA), see note at the end of this article.
According to BDO Canada, the industries most exposed to the suspension are those that depend heavily on direct-to-consumer, e-commerce sales, including:
- Consumer goods such as apparel, accessories and personal care products
- Health, wellness and supplements
- Electronics and lifestyle products
- Niche and specialty brands that use online platforms to reach U.S. buyers
Companies that work with third-party logistics providers (3PLs), parcel consolidators, or fulfillment services under Section 321 should expect service cost increases and operational disruptions almost immediately after the new rules take effect.
Canadian exporters need to act quickly to adjust. According to the U.S. cross-border tax and customs advisory specialists, like BDO, PwC and Avalara, companies can implement the following proactive steps:
- Identify the affected products (SKUs) and shipment flows most affected by the suspension. By mapping which SKUs rely on de minimis clearance, companies can better anticipate the impact and risks on their business operations.
- Review product classifications. Assigning the correct 10-digit Harmonized Tariff Schedule (HTS) code reduces the chance of border delays, rejections and penalties. It also confirms that all imports adhere to current trade restrictions.
- Update shipping documentation to provide more detailed information, including product descriptions, tariff classifications and, where applicable, Canada-United States-Mexico Agreement (CUSMA) origin declarations. This will facilitate smoother customs clearance and minimize the risk of delays.
- Recalculate landed costs associated with U.S.-bound shipments, taking into account applicable duties, brokerage fees and clearance charges. This exercise is essential to execute Step 5.
- Revise pricing models and customer terms to account for potential duty liabilities. The responsibility of U.S. import clearing will fall on the seller, or the buyer, depending on the chosen Incoterm (11 universal terms used in global transactions).
“This shift underscores the importance of precision in trade operations. Canadian exporters must now treat every low-value shipment as a high-stakes transaction, where accurate documentation, tariff classification and Incoterms® knowledge are no longer optional, but essential to avoid costly delays and penalties,” says Emiliano Introcaso, Senior operations product manager at Export Development Canada.
Groups that can play a vital role in helping you adjust your import strategy for the U.S., include:
- U.S. customs brokerage and trade consulting firms: Unlike large shipping couriers that also offer U.S. brokerage service, these experts—usually boutique firms—may be better equipped to help small- to medium-sized enterprises (SMEs) strengthen their compliance frameworks, improve operational efficiency and ensure that their cross-border transactions are managed effectively and in accordance with U.S. regulations.
These specialists can serve as an extension of your compliance team, offering tailored support in several key areas such product classification, customs valuation and documentation requirements while ensuring compliance with U.S. trade laws. They also help businesses manage landed costs, train internal teams on compliance and improve communication with U.S. authorities to reduce operational disruptions.
- Logistics consultants/third-party logistics (3PL) partners: These firms specialize in redesigning and optimizing shipment flows. They can help identify affected SKUs and calculate landed costs while considering the tradeoffs between direct-to-consumer shipping and alternatives, like consolidated shipments to U.S. fulfillment centres.
“For many companies, U.S.-based distribution—whether through their own warehouse or a 3PL partner—can both lower per-unit freight costs and ensure faster delivery to customers,” says Weiner.
"Consolidating shipments not only spreads clearance costs over a larger volume while planning for product returns and marketplace partnerships can help mitigate risks. EDC and our U.S.-based teams are available to support companies in overcoming challenges and finding practical solutions,” he says.
If you’re currently working with a 3PL provider in Canada that also operates in the U.S., this is a great starting point for discussions about different shipping scenarios and their associated landed costs. For example, you could compare a cross-border B2C (business-to-consumer) scenario with consolidated shipments to a 3PL or fulfillment centre in the U.S.
- Legal advisors should review sales agreements and Incoterms to clarify which party is responsible for new duty liabilities. They can also assist in updating these sales contracts to reflect any changes in duty liabilities, ensuring compliance and protecting your business interests.
The suspension of de minimis may also require Canadian companies to reconsider their entire U.S. distribution model. For some, establishing a U.S.-based fulfillment centre could reduce per-unit shipping costs, simplify compliance and deliver goods faster. Others may find that partnering with 3PL providers who have customs expertise, or exploring options, like foreign trade zones (FTZ) in the U.S. or bonded warehouses in Canada, can offer added flexibility in managing duties.
“The suspension of de minimis is more than a regulatory update, it’s a strategic inflection point. Exporters must rethink how they deliver value to U.S. customers, balancing cost, compliance and customer experience. Those who adapt quickly will be best positioned to thrive,” says Carley Mortimer, Senior knowledge product manager, EDC.
Whichever path they choose, Canadian exporters can’t afford to wait. Now is the time to review supply chains, revisit pricing strategies and strengthen compliance frameworks. By acting early—and by engaging the right customs, logistics and legal specialists—exporters can protect their U.S. market presence and remain competitive in a changing trade environment.
Companies can find more details in the following documents:
- U.S. President Executive Order 14324 of July 30, 2025, Suspending Duty-Free De Minimis Treatment for All Countries.
- CBP guidance of Aug.15, 2025, CSMS # 65934463 - GUIDANCE: Payment of Duty on International Mail Shipments pursuant to Executive Order 14324 Suspending Duty-Free De Minimis Treatment for All Countries.
- Companies can also consult the updated CBP page on E-Commerce Frequently Asked Questions.
Note: Duty-free treatment under the Canada-United States-Mexico (CUSMA) remains available for qualifying Canadian- or Mexican-origin goods, even when subject to tariffs imposed under the International Emergency Economic Powers Act (IEEPA)—commonly referred to as the IEEPA fentanyl tariffs. However, this exemption isn’t automatic and must be claimed by the importer through a formal, or informal, entry filed with U.S. Customs and Border Protection (CBP).
Importantly, CUSMA preference can’t be claimed for postal shipments subject to Executive Order 14324 (issued July 30, 2025). Under this order, international postal shipments are now subject to IEEPA tariffs regardless of CUSMA qualification.
