U.S. Abolishes Duty-Free Threshold: What Canadian SMBs Must Do Next

Duty-free no more: The U.S. has scrapped its de minimis exemption. Canadian SMBs exporting south now face higher costs and urgent decisions. 

Canadian small businesses exporting to the United States are bracing for higher costs after the U.S. government revoked its long-standing de minimis exemption for low-value imports.

As of August 29, 2025, Canadian shipments valued under US$800 no longer enter duty-and tariff-free unless they qualify under the Canada–United States–Mexico Agreement (CUSMA). The Canadian Federation of Independent Business (CFIB) said the change means new administrative requirements and financial burdens for exporters. A CFIB survey found nearly one-third of Canadian exporters expect to be negatively affected.

The loss of the exemption means all Canadian shipments, regardless of size, now require formal customs clearance. For small and medium-sized businesses, particularly those relying on e-commerce or direct-to-consumer sales, the shift introduces new costs and risks.

CFIB said firms can expect:

• Import duties of up to 35 per cent on goods that do not meet CUSMA rules of origin
• Mandatory commercial invoices and HS code declarations for all parcels
• CUSMA certification requirements for preferential treatment
• Additional brokerage and handling fees from couriers such as Canada Post, UPS and FedEx
• Longer delivery times due to inspections and customs processing
  

For companies built around small-batch cross-border sales, those changes are especially daunting. “As an e-commerce business in Canada, the de minimis exemption is everything,” Hockey Stick Man owner and founder Joey Walsh said in an interview with Global News. “It’s absolutely everything. I’m fearful for everybody’s businesses now that it’s being removed.”

Compliance under the new rules

CFIB said duty-free access is still possible if goods meet CUSMA origin requirements, but only if exporters provide the proper documentation.

Options include:

• Certificates of origin:
  Declarations can be made on invoices or issued as separate certificates. Blanket certifications may cover multiple shipments of the same goods for up to 12 months.
• Low-value shipments:
  Parcels under US$2,500 may qualify for simplified declarations through some couriers.
• HS codes:
  Accurate product classification is essential to avoid errors, fines or shipment holds.

The federation is urging businesses to track new expenses, delays and lost sales to support future advocacy efforts. 

For companies that can’t meet CUSMA requirements, the costs are even steeper.

Shipments containing components sourced from outside North America are now subject to tariffs and processing fees. Packages may be held at the border until payment is confirmed, and couriers have warned that inspections could become more frequent under the revised rules.

For some firms, modest changes in sourcing could make products eligible under CUSMA, though this may require renegotiating supply chains and working with brokers.

Uneven playing field

The Canada Border Services Agency says international shipments worth $20 or less can enter duty and tax-free, with the threshold rising to $60 for gifts sent by individuals.

CFIB has warned that the loss of the exemption will add costs that make it harder for Canadian exporters to compete with U.S.-based sellers.

CFIB has released updated resources to help members adapt, including webinars with the Canadian Society of Customs Brokers and guidance from the Trade Commissioner Service. Couriers such as Canada Post, FedEx and UPS are also updating instructions for shippers under the new rules.

The federation is encouraging businesses to share examples of increased costs, delayed deliveries and lost revenue so it can press its case with Ottawa and Washington. It also recommends that exporters work closely with brokers or freight forwarders to avoid missteps.While the full impact will take time to assess, Canadian SMBs that rely on U.S. markets are now under pressure to adapt quickly. The end of the de minimis exemption marks a major shift in North American trade — one that could reshape cross-border commerce for small firms.