Canadian businesses are bracing for significant disruption to cross-border e-commerce as the United States prepares to eliminate its $800 de minimis threshold for imports from Canada in August 2025. The policy change, tucked into last year’s trade negotiations, threatens to upend a system that has allowed Canadian merchants to ship products valued under $800 to American consumers without duties or formal customs entries.
For Toronto-based cycling apparel manufacturer Velocio, the change represents a potential crisis. “About 60% of our direct-to-consumer sales go to American customers,” explains Sarah Chen, the company’s operations director. “We’ve built our entire logistics model around the de minimis exemption. Now we’re facing a complete overhaul with less than a year to prepare.”
The de minimis threshold—essentially a duty-free allowance on low-value shipments—has been a cornerstone of cross-border e-commerce between Canada and the U.S. While Canada maintains a comparatively low C$150 threshold, the American $800 limit has created a significant competitive advantage for Canadian businesses selling into the much larger U.S. market.
According to data from Statistics Canada, cross-border e-commerce between the two countries reached $14.2 billion in 2023, with Canadian exports making up approximately $5.8 billion of that total. The Canadian Federation of Independent Business estimates that nearly 40% of small and medium-sized Canadian exporters rely on the de minimis provision for the majority of their U.S. sales.
“This isn’t just a logistics issue—it’s potentially an existential threat for thousands of Canadian businesses,” says Mark Warner, an international trade lawyer with MAAW Law in Toronto. “Many companies built their entire business models around frictionless access to American consumers. They’re now facing not just new tariffs, but also complex customs procedures they’ve never had to navigate before.”
The elimination of the exemption stems from persistent bilateral trade tensions. American officials have long criticized the asymmetry between the two countries’ thresholds, arguing it disadvantages U.S. businesses selling into Canada. The Canadian retail sector, meanwhile, has lobbied against raising Canada’s threshold, citing concerns about competitive disadvantages for domestic retailers.
The fallout extends beyond just added costs. Brad Ferguson, founder of Edmonton-based artisanal furniture company Boreal Designs, explains: “It’s not just about paying the duties—though that’s certainly a concern. It’s about the paperwork, the customs brokers, the delays at the border. We’ll need to completely rethink how we present our pricing to American customers.”
Large retailers with established cross-border infrastructure may weather the storm, but smaller businesses face a steeper challenge. According to a recent survey by Export Development Canada, only 23% of affected small businesses have begun preparations for the change, with most citing uncertainty about the specific requirements they’ll face.
“Many businesses are frozen in place,” explains Danielle Goldfarb, head of global research at RIWI Corp, a Toronto-based data firm. “They know change is coming but don’t have the resources to develop contingency plans for regulations that haven’t been finalized.”
Some businesses are exploring creative solutions. Montreal-based skincare company Lumière Botanique is considering establishing a U.S. warehouse to avoid cross-border shipping entirely. “We’re looking at leasing space in upstate New York,” says founder Marie Pelletier. “The initial investment is substantial, but it might be our only viable path forward.”
Others are revamping their product strategies. “We’re redesigning our product line to focus on higher-value items where the duty would represent a smaller percentage of the overall cost,” explains Vikram Patel of Vancouver-based Coastal Essentials, which sells handcrafted home goods. “Our $30 items might become uncompetitive, but our $300 pieces could still work with the added costs.”
Logistics providers are scrambling to develop new service offerings ahead of the change. UPS Canada has launched a “De Minimis Transition Program” to help businesses navigate the new landscape, while several customs brokerage firms are expanding their small business services.
“We’re seeing a surge in inquiries from businesses that have never needed a customs broker before,” says Jean Rivard, director of small business solutions at BorderConnect, a Windsor-based customs technology firm. “Many don’t even understand basic customs classification or country-of-origin rules because they’ve never had to.”
The Canadian government has established a task force to help businesses prepare, but critics argue the support is insufficient. The Canada Border Services Agency has published preliminary guidance, though many businesses report that the information lacks the specificity needed for effective planning.
“The government needs to do more than just inform businesses about the change—they need to provide concrete transition support,” argues Goldy Hyder, president of the Business Council of Canada. “This includes negotiating extended transition periods, providing simplified procedures for small shipments, and offering financial assistance for the most vulnerable sectors.”
For consumers, the changes could mean higher prices and longer wait times for products from Canadian vendors. American customers accustomed to quick, duty-free deliveries from Canadian online retailers may face unexpected charges and customs clearance delays.
As the deadline approaches, Canadian businesses are increasingly vocal about their concerns. A coalition of industry groups has launched the “Save Cross-Border Commerce” campaign, advocating for a phased implementation or alternative arrangements to mitigate the impact.
Whether through adaptation, innovation, or advocacy, Canadian businesses are mobilizing to survive what many describe as the most significant disruption to Canada-U.S. e-commerce in decades. For businesses that have built their foundations on cross-border sales, the coming year represents a critical transition period that will test their resilience and creativity in an increasingly complex trading environment.
