{"id":105732,"date":"2025-08-29T15:59:10","date_gmt":"2025-08-29T15:59:10","guid":{"rendered":"https:\/\/www.newsbeep.com\/ca\/105732\/"},"modified":"2025-08-29T15:59:10","modified_gmt":"2025-08-29T15:59:10","slug":"small-businesses-that-relied-on-duty-free-u-s-shipping-wonder-if-they-can-survive-without-it","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ca\/105732\/","title":{"rendered":"Small businesses that relied on duty-free U.S. shipping wonder if they can survive without it"},"content":{"rendered":"

As of Friday, Canada’s small businesses can\u00a0no longer\u00a0ship small packages to the U.S. duty-free\u00a0\u2014 and some online sellers are worried that their companies\u00a0won’t survive the hit.<\/p>\n

The nearly century-old de minimis\u00a0exemption, which in recent\u00a0years allowed goods under $800 US to enter the\u00a0U.S. without extra fees, is ending as a July\u00a0executive order by U.S. President Donald Trump takes effect.\u00a0<\/p>\n

That means those shipments will now be subject to duties of up to $200 US, depending on the country of origin, and\u00a0Canadian\u00a0small businesses with American customers will be smacked with\u00a0extra costs that eat into their profits.\u00a0<\/p>\n

“We have cut off all of our shipping to the United States because, right now\u00a0\u2014 with the amount of risk and lack of information on\u00a0shipping to the States\u00a0\u2014 we can’t justify it,” said Jess Sternberg, the owner of Vancouver-based Free Label clothing.<\/p>\n

For years, the U.S. government had expressed concern that de minimis shipments were being used to smuggle deadly opioids into the country, because they’re not inspected as closely by U.S. Customs. It first suspended the exemption\u00a0for shipments from China earlier this year, a policy change that\u00a0hit big e-sellers<\/a>\u00a0like Shein and Temu.<\/p>\n

Canada has its own de minimis exemption for goods from the U.S. and Mexico up to $150.<\/p>\n

But the end of the U.S.\u00a0de minimis\u00a0for the rest of the world, including Canada, will impact mom-and-pop shops “disproportionately,” according to\u00a0John Boscariol, a trade expert and partner at\u00a0McCarthy Tetrault in Toronto.<\/p>\n

“Many of them who have relied on these low-value shipments to the United States as part of their bread and butter for survival are being hit by this, and possibly may have to go out of business.”<\/p>\n

A tale of two Canadian businesses\"AJess Sternberg, the owner of Free Label Clothing in Vancouver, says she’s not sure if her business can survive the end of the de minimis exemption. (Thomas Bullok Photography)<\/p>\n

Canadians can still send letter mail and gifts under $100 US to the U.S. for no extra cost, and companies that meet the Canada-U.S.-Mexico Agreement (CUSMA)’s rules of origin<\/a> will, in theory, still be able to ship duty-free. To qualify, a product must meet specific criteria, like having at least a\u00a0certain percentage of it\u00a0made in North America.<\/p>\n

However, even in those cases, small and medium-sized businesses aren’t totally off the hook, said Boscariol,\u00a0pointing to extra administrative costs for customs clearance \u2014 like brokerage fees for companies that have to prove their shipments are compliant.\u00a0<\/p>\n

Sternberg is concerned about those costs. Her business, which specializes in size-inclusive slow fashion for women, makes its clothing in Canada from a mix of domestic and imported materials.<\/p>\n

However, her Canadian sales have actually dwindled over the last year, which she attributes to economic uncertainty. Meanwhile, her U.S. customer base is growing, making up\u00a0nearly 45 per cent of all\u00a0sales since the beginning of this year.\u00a0<\/p>\n

“Not only is that where the growth potential is, that’s kind of where the potential for us to maintain is, which is important right now for small businesses, because it’s been a hard few years,” she said.<\/p>\n

With the recent changes, there’s “definitely a chance” that the business won’t survive this period, Sternberg said.<\/p>\n

“We’re going to move forward with just focusing on our Canadian customers and our international customers, and we hope that things change and we can ship to the States in the future.”<\/p>\n

\"AAn employee is shown at Free Label Clothing’s factory in Vancouver. (Thomas Bullok Photography)<\/p>\n

Meanwhile, another Canadian small business says it\u00a0will absorb the cost of the added duties\u00a0\u2014 because a surge of sales from the Buy Canadian movement has given it the wiggle room to do so.<\/p>\n

“We’ve made the decision to eat the cost, which is \u2014 it’s big, it’s huge,” said Jenn Harper, the founder of Cheekbone Beauty Cosmetics, an Indigenous-owned\u00a0clean cosmetics\u00a0company based in St. Catharines, Ont.<\/p>\n

About 30 to 35 per cent of its sales are from the U.S., according to Harper. But the company saw a surge in Canadian orders at the top of the year in response to Trump’s trade escalation and threats of annexation.<\/p>\n

\"JennJenn Harper, the founder of Cheekbone Beauty, says her company will absorb the extra costs that arise from the end of the de minimis exemption. (Submitted by Jenn Harper )<\/p>\n

The extra costs amount to a 25 to 30 per cent increase in shipment fees, Harper says, and the company may not be able to sustain absorbing them long term.<\/p>\n

“We’re doing this on a temporary basis to see how much it actually is going to impact our bottom line,” she said.\u00a0“But we’ve made that decision because we don’t want to scare any of our U.S. customers away.”<\/p>\n

‘Double-edged sword’<\/p>\n

The de minimis program is a “double-edged sword” for the small businesses that will be hurt by its loss,\u00a0according to Bob Kirke, executive director of the Canadian Apparel Federation.<\/p>\n

“On the one hand, it allowed lots of smaller companies to ramp up sales, direct to consumer, into the United States. No paperwork, no duties. It’s fantastic,” he said.<\/p>\n

“But it’s gone. And we’re left with a lot of companies that should know those rules of origin better, but they haven’t had to for a few years. And so that’s going to be the adjustment.”<\/p>\n

WATCH | Why online sellers are worried about losing de minimis:\u00a0\"\"<\/p>\n

Online sellers fear they\u2019ll lose U.S. customers as duty-free shipping comes to an end<\/p>\n

Parcels worth less than $800 weren\u2019t subject to U.S. duties under a longstanding trade policy, known as the de minimis exemption. But President Donald Trump signed an executive order stating that as of Aug. 29, it would be eliminated, leaving many businesses figuring out how to navigate the change.<\/p>\n

Some shipping companies told CBC News how they’ll adjust to the end of de minimis. FedEx\u00a0is still accepting U.S.-bound shipments, while Canada Post says it’s working with a third party to collect and remit duties to U.S. Customs.<\/p>\n

Shipping firm Chit Chats, however,\u00a0will only accept U.S.-bound packages that have\u00a0duties\u00a0paid. And e-commerce companies\u00a0Etsy\u00a0and Ebay\u00a0say they\u00a0won’t accept shipping label purchases\u00a0from Canada Post for packages going to the U.S.<\/p>\n

Kirke acknowledged that some small businesses could shut down as the exemption ends. The other challenge, he added,\u00a0is that\u00a0Canadian entrepreneurs won’t be able to innovate as much\u00a0without easy access to the U.S. market.<\/p>\n

“It’ll cap some of that innovation, some of that growth, and that’s the lifeblood [of the]\u00a0industry. So that’s the\u00a0challenge,” he said.\u00a0<\/p>\n

“It has taken away a really valuable tool for emerging companies.”<\/p>\n","protected":false},"excerpt":{"rendered":"As of Friday, Canada’s small businesses can\u00a0no longer\u00a0ship small packages to the U.S. duty-free\u00a0\u2014 and some online sellers…\n","protected":false},"author":2,"featured_media":105733,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[43,44,41,39,42,40],"class_list":["post-105732","post","type-post","status-publish","format-standard","has-post-thumbnail","category-headlines","tag-headlines","tag-news","tag-top-news","tag-top-stories","tag-topnews","tag-topstories"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/105732","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/comments?post=105732"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/105732\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/105733"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=105732"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=105732"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=105732"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}