“I honestly didn’t see this coming,” says Eric Silverstein, owner of Frontier Logistics, a small cross-border shipping operation based in Windsor. “One day we’re shipping products duty-free, the next we’re facing thousands in unexpected tariffs.”
Silverstein isn’t alone. Across Canada, small and medium businesses are reeling from the expiration of the de minimis threshold that previously allowed shipments valued under $800 USD to enter the United States without duties or formal customs procedures. The provision disappeared when former President Donald Trump opted not to renew it as part of the United States-Mexico-Canada Agreement (USMCA) implementation, and the effects are now cascading through supply chains.
For Maria Chen, who runs an artisanal leather goods company in Toronto with twelve employees, the impact has been immediate. “We went from paying zero duties on our small batch shipments to American boutiques to suddenly facing a 9% tariff,” she explains during our conversation at her east-end workshop. “That’s about $30,000 in unexpected costs this year alone—money we simply haven’t budgeted for.”
The change affects thousands of Canadian businesses that had built their U.S. export strategy around the duty exemption. According to the Canadian Federation of Independent Business (CFIB), approximately 45,000 small businesses that regularly ship to American customers are now scrambling to adjust their pricing and logistics.
“This represents a significant blow to cross-border commerce,” explains Corinne Pohlmann, Senior Vice-President at the CFIB. “Many of these businesses operate on razor-thin margins. When you suddenly add tariff costs and additional customs paperwork, their entire business model becomes unsustainable.”
The policy shift comes at a particularly challenging time for Canadian exporters already struggling with supply chain disruptions, inflation, and labor shortages. Data from Statistics Canada shows that small shipment exports to the U.S. totaled approximately $8.7 billion last year, with nearly 60% falling under the previous $800 threshold.
In Ottawa, trade officials at Global Affairs Canada acknowledge they’re hearing mounting concerns. “We’re engaging with our American counterparts on this issue,” a department spokesperson stated. “The integrated nature of our economies means these kinds of barriers ultimately hurt businesses on both sides of the border.”
Walking through the warehouse district in Mississauga last week, I met with several business owners directly affected by the change. Raj Patel’s electronics component business ships dozens of small orders daily to American manufacturers.
“We’re already losing customers,” Patel tells me as workers package small circuit boards behind him. “When I tell American buyers they now need to pay duties plus our products, many just find U.S. suppliers instead. I’ve had to lay off two people already.”
The U.S. Trade Representative’s office defends the policy change as necessary to “level the playing field” for American producers competing with imports. However, trade experts question this reasoning.
“This isn’t about protecting American industries—it’s about bureaucratic revenue generation,” argues Patrick McDonough, international trade lawyer with Borden Ladner Gervais. “The administrative burden now placed on small shipments actually costs more to process than the duties collected in many cases.”
Companies are exploring various adaptation strategies. Some are consolidating shipments to spread duty costs across larger orders. Others are establishing American warehousing to avoid repeated border crossings. The most concerning trend, however, is businesses simply abandoning the U.S. market altogether.
“We’ve surveyed our members, and about 22% say they’re considering stopping U.S. exports entirely,” notes Elise DuBois from the Canadian Manufacturers & Exporters association. “That represents billions in lost economic activity and potentially thousands of Canadian jobs.”
For consumers on both sides of the border, the consequences are equally troubling. American customers face higher prices for Canadian goods, while Canadian producers lose access to their largest export market. The Canada Border Services Agency estimates the change affects approximately 6.8 million small shipments annually.
The situation highlights the fragility of cross-border trade despite the USMCA’s supposed improvements. While large corporations can absorb such changes, small businesses face disproportionate hardship.
Back in Windsor, Silverstein is retrofitting his warehouse to accommodate larger consolidated shipments. “We’re adapting, but it’s costly,” he sighs, gesturing toward newly installed racking. “The frustrating part is this wasn’t even debated publicly. It just vanished in the fine print, and now thousands of businesses are paying the price.”
As Canadian officials continue pressing for a solution, the episode serves as a stark reminder of how vulnerable small businesses remain to policy shifts beyond their borders—and how the details buried in trade agreements can suddenly upend entire business sectors with the stroke of a pen.
