With no duty-free shipping for small packages in the U.S., Canadian online merchants will be faced with a tough gamble: pay high fees for small packages or get a boost in holiday sales from American shoppers?
For nearly a century, international packages valued at less than $800 have been able to enter the United States duty-free under a de minimis exemption. That policy ended in August when President Donald Trump's executive order went into effect.
At the time, the choice was clear for some businesses.
“We haven't shipped to the United States in almost three months,” said Jessica Sternberg, owner of Free Label Clothing, an online clothing store in Vancouver. But it has had a “huge impact on our business as almost 50 percent of our business is in the US.”
It's the holiday season, and Sternberg's small business, like many others, is counting on increased online sales to break even. At the same time, shipping to American customers has become more expensive than it has been in a long time.
“We work so hard to stay above water,” she said. “It’s so unrealistic to expect people who run small businesses and do a million different things to know everything there is to know about exporting.”
“We have effectively isolated half of our clients.”
Eliminating the de minimis exemption was a “huge change” for small businesses, said Samuel Roscoe, a business education professor at the University of British Columbia.
Many of them “had to rack their brains and look for different ways to mitigate customs fees and duties,” he said.
E-commerce businesses can include the duty in the total checkout cost or force US shoppers to pay the duty themselves upon delivery. But in the latter case, Canadian retailers shipping them could risk returns or unexpected costs if the buyer doesn't pay.
Back in August, the Canadian Federation of Independent Business interviewed It has 3,315 members, with 31 percent of SMEs saying that ending the de minimis exemption would affect them directly or indirectly.
The US announced it was ending a long-standing trade policy – a de minimis exception – that left businesses facing the latest trade disruption to navigate their own way.
Those who couldn't get their goods into compliance with the Canada-United States-Mexico Trade Agreement (CUSMA) or who couldn't afford to pay a customs broker for advice may have decided to stop shipping to the U.S. altogether, Roscoe said.
Others had to get creative, opening distribution centers in the U.S. where they could ship bulk packages from Canada, rather than paying brokerage fees for small packages individually, Roscoe explained.
Sternberg herself had to get creative. Her business now allows American customers to place orders once a week on Sundays, giving her team the rest of the week to complete the necessary paperwork.
However, she is concerned that those US buyers have already left after months of being barred from her site.
“We've essentially quarantined half of our customers and hope they'll come back one day to shop for our only sale of the year,” she said. Their annual sale lasts several days but is only valid on one Sunday.
“And this is – as most small businesses find – this sale will make up the majority of our profit for the year, so it's a big problem.”
“I hope we do get a lot of American traffic that day, but more than that, I hope our Canadian customers come and show up.”
US Buyers Offer to Pay Tariffs, Business Owner Says
One small business owner who stopped shipping to the US before the de minimis benefit ended says she received an unexpected offer from US customers.
“I got emails saying they would pay the fee and sort it out,” said Katherine Choi, who runs Hanji Gifts, three South Korean-style gift shops in Toronto.
A few months ago, Choi decided that because of US tariffs and the continued threat of postal strikes, she would no longer risk shipping goods to the US.
That hasn't stopped American clients from asking her for it. But she chose not to change her policy, and with the abolition of duty-free trade she became even more reluctant to do so.
“The more I [looked] into her, and the more difficult she got – she's too busy,” she said. She sees Americans trying to shop on her site and abandoning their carts when they realize they can't check out.
At her Queen Street store in Toronto, the walls are decorated with elaborate Christmas cards, stockings and agendas for 2026. While Choi will get most of her holiday sales from Canadian shoppers shopping in stores, she knows she's losing out to U.S. shoppers searching online for deals.
“Our online sales are higher than last year. So I know they would be even higher if we could ship to the States,” she said, adding that she would reconsider shipping to the US if things went back to the way they were before.
Roscoe, the professor, called small and medium-sized enterprises the “backbone” of the Canadian economy because they employ so many people across the country.
“If this affects their business and their profits, then their employees will suffer. They hire fewer people. And then there’s sort of a domino effect,” he explained.
“So the removal of this single exemption has a ripple effect throughout the Canadian economy.”
