On August 29, 2025, a decades-old trade rule quietly underpinning billions of dollars in cross-border commerce will vanish, setting off a wave of uncertainty and anxiety among Canadian businesses and U.S. consumers alike. The United States is ending its de minimis exemption—a policy that, until now, allowed shipments valued under US$800 to enter the country duty-free and with minimal paperwork. The move, ordered by President Donald Trump in July, marks a dramatic shift in North American trade relations, with ripple effects stretching from small-town jam makers in Nova Scotia to major e-commerce platforms and investment markets worldwide.
For many Canadian entrepreneurs, the de minimis rule wasn’t just a technicality—it was a lifeline. According to Global News, the exemption enabled small and medium-sized businesses to expand into the massive U.S. market without the burden of tariffs or complex customs declarations. "As an e-commerce business in Canada, the de minimis exemption is everything. It’s absolutely everything. I’m fearful for everybody’s businesses now that it’s being removed," said Joey Walsh, owner and founder of Hockey Stick Man. The end of this rule means all goods entering the U.S. from Canada, regardless of value, will now face "all applicable duties" and formal customs entry. For Canadian exporters, that means not only higher costs but also a mountain of new paperwork and logistical headaches.
John Boscariol, an international trade and investment lawyer at McCarthy-Tétrault, explained to Global News, "You don’t need a formal U.S. customs declaration. You don’t have to provide all kinds of data in advance. And those shipments can enter the U.S. market tariff- or duty-free. That’s no longer going to apply as of Aug. 29." Boscariol added that even for products covered by the current Canada-United States-Mexico Agreement (CUSMA), proving eligibility for tariff-free status is a complex and sometimes costly process. For items outside CUSMA, the U.S. tariff rate currently stands at a punishing 35 percent. "In the short term, businesses are going to face big challenges in dealing with this 35 per cent tariff," Boscariol warned, noting that ongoing negotiations between Canada and the U.S. have yet to yield any public progress on this front.
While large-scale commodity exports like wheat, beef, and canola oil will continue to move tariff-free under CUSMA, the real pain will be felt by the smallest players—those who have built their business models around shipping small, frequent orders across the border. According to Dr. Sylvain Charlebois, a Canadian professor and researcher in food distribution and policy, the de minimis exemption served as a "hidden artery" for Canada’s food entrepreneurs. "What is being dismantled is the hidden artery that kept small players alive: the Nova Scotia jam maker shipping gift boxes to Vermont, the B.C. chocolatier sending truffles to Seattle, the Ontario pet treat company tapping into the booming specialty market," Charlebois wrote in Troy Media. He estimates that between $500 million and $1 billion worth of Canadian food exports to the U.S. each year moved under this $800 threshold—a small slice of the $40-plus billion agri-food trade, but a vital one for the companies involved.
Independent stores in major U.S. cities like New York, Chicago, and Los Angeles have also depended on these small Canadian shipments to diversify their shelves and offer unique products to their customers. With the new rules, American consumers will see fewer Canadian brands and, inevitably, higher prices. The message to Canadian exporters, Charlebois argued, is blunt: scale up or stay home.
For small businesses, the financial blow could be existential. The Canadian Federation of Independent Business (CFIB) found that one in three small or medium-sized Canadian enterprises will be impacted by the change, and a recent CFIB survey revealed that one in five small business owners may be forced to close within six months due to tariffs. Kim Doherty, owner of Fleece and Harmony, a small woollen mill in Prince Edward Island, told Global News, "About 40 per cent of my online business is going to the U.S., and this has created a lot of uncertainty and definitely a drop in my U.S. business. My U.S. orders have probably declined by about 25 per cent since the whole tariff talk has started because quite frankly, a lot of people don’t understand what’s going to happen or they anticipate that the rules might be reversed again."
The removal of the de minimis exemption is not just a Canadian problem. The new rule applies to all countries, and it’s part of a broader U.S. strategy to rebalance trade relationships, reduce the trade deficit, and address security concerns—especially the influx of low-value shipments from markets like China and Hong Kong. According to Ainvest, over 1.3 billion shipments entered the U.S. under the de minimis exemption in 2024 alone, a staggering figure that underscores the policy’s global reach. The suspension is also aimed at curbing illicit drug imports and closing loopholes exploited by foreign businesses.
But these policy goals come with a price. The new rules are expected to increase costs for consumers and businesses alike, with many importers likely to pass on higher expenses through price hikes. Michelle Auger, a senior policy analyst at the CFIB, explained, "However the cost is absorbed, however businesses continue to try to make their products more attractive, we will start to see the increase on the consumer’s end. Because somewhere we need to recover that cost from a small business perspective." Market sectors that rely heavily on imported goods—particularly retail and e-commerce—may face increased operational costs and pricing pressures, potentially fueling inflation. Investors, according to Ainvest, may shift their focus to domestic producers and companies with robust supply chain resilience as the market adjusts to these new realities.
The Canadian government, for its part, has come under criticism for not doing enough to protect small exporters. Ottawa’s own de minimis threshold is just C$150, a fraction of the former U.S. level, meaning Canadian consumers never enjoyed the same duty-free benefit as their American counterparts. Raising Canada’s threshold, some argue, would benefit consumers at home and give Ottawa stronger leverage in demanding reciprocity from Washington. Yet, as of now, the Canadian government has not publicly raised the de minimis issue in its negotiations with the United States.
At its core, the end of the de minimis exemption is about more than tariffs and paperwork. It’s about the survival of small businesses, the diversity of products on store shelves, and the vibrancy of cross-border commerce that has long defined the Canada-U.S. relationship. As Dr. Charlebois put it, "Trade disputes often play out as billion-dollar chess matches. But the pawns—small shipments, craft producers, specialty stores—give life to Canada’s food economy. That is why this fight matters: protecting small exporters is not charity; it is preserving competition and innovation."
As the new rules take effect, all eyes will be on how businesses, consumers, and policymakers adapt to a trade landscape that suddenly feels a lot less open—and a lot more uncertain.
