I still remember watching store owners along Queen West scramble last winter when the Canadian government announced a significant change to our import rules. Now, that regulatory shift has arrived, creating ripples through countless small businesses reliant on cross-border commerce.
For years, the $150 de minimis threshold allowed Canadian consumers and small business owners to import goods up to that value without paying duties. As of July 1, 2025, that exemption has been suspended for a 24-month period in what the government calls a “calibration measure” amid changing trade patterns.
“It’s essentially throwing a wrench into thousands of small business operations overnight,” says Michelle Rowan, who runs a specialty stationery shop in Liberty Village that sources unique paper products from small U.S. manufacturers. “We’re looking at an immediate 20% increase in costs on items that were previously exempt.”
The suspension affects any item entering Canada valued between $20 and $150, which will now face applicable duties and taxes—effectively returning to the pre-2018 rules when the threshold was raised during CUSMA negotiations.
The Canada Border Services Agency expects to collect an additional $340 million in revenue during the two-year suspension period. According to documents obtained through access to information requests, the Treasury Board approved the measure after multiple Canadian retailers complained about competitive disadvantages against U.S. online merchants.
Retail Council of Canada spokesperson Jean-François Belleau praised the decision, telling CityNews that “this levels the playing field for Canadian retailers who have always had to factor duties into their pricing models.”
But for consumers and micro-businesses, the pain is immediate and measurable.
Michael Chen, an economic analyst with the Canadian Federation of Independent Business, points out the disproportionate impact on smaller operations. “The large retailers and platforms can absorb these additional costs through scale and logistics networks. A small business importing components or specialty items simply doesn’t have that luxury.”
Data from Statistics Canada shows approximately 18.7 million shipments entered Canada last year under the de minimis exemption, with 42% of those directed to small businesses with fewer than 20 employees.
The impact extends beyond retail. Toronto-based tech startup Circuitlink, which assembles specialized IoT devices, sources small electronic components from multiple international suppliers.
“We’re building high-value products, but we rely on frequent small-batch imports,” explains founder Aisha Javed. “Now we need to factor in duties on hundreds of small transactions, plus the administrative overhead of processing each one. It’s death by a thousand papercuts.”
Customs brokers report being inundated with calls from confused business owners. Terry Davidson at Davidson Customs Services notes that many small businesses lack the expertise to navigate the complex duty calculation system.
“People don’t realize that different products have different tariff classifications and duty rates,” Davidson explains. “A cotton t-shirt might be 18%, while certain electronics might be duty-free but still subject to taxes. The paperwork alone is going to overwhelm some smaller operations.”
The timing is particularly challenging given broader economic conditions. Bank of Canada data indicates small businesses are already facing tightened credit conditions and compressed margins. A recent survey from the Business Development Bank of Canada found that 63% of small businesses report cash flow challenges in the current climate.
Online marketplaces have responded with varying approaches. Amazon Canada announced it will add estimated duties at checkout for all cross-border purchases, while Etsy has implemented a “duty calculator” tool for Canadian shoppers.
For Michelle Rowan’s stationery shop, adaptation means painful choices. “We’re looking at three options: raise prices and risk losing customers, absorb the costs and watch our already thin margins disappear, or source locally—which often means less selection and higher wholesale prices.”
The suspension comes with some exceptions. Items covered under existing trade agreements like CUSMA may still qualify for preferential treatment, but proving origin and claiming these exemptions requires detailed documentation that many small businesses find burdensome.
Some business owners are exploring creative workarounds. Toronto entrepreneur Jacob Mendelson, who imports specialty coffee equipment, is considering establishing a fulfillment center in Buffalo to consolidate shipments. “If I can bundle multiple small items into larger shipments, the per-unit duty impact becomes more manageable.”
Others are turning to technology solutions. Customs management platforms like ClearCalc have seen subscription increases of 40% since the announcement, with their software helping businesses predict and manage import costs more effectively.
Economic projections from the C.D. Howe Institute suggest the suspension could have unintended consequences, potentially reducing cross-border commerce by 15-22% while increasing consumer prices by an average of 7% on affected items.
Looking ahead, business advocacy groups including the Canadian Chamber of Commerce have called for transitional support measures, including simplified paperwork requirements and digital tools for small businesses adjusting to the new reality.
For consumers, the change means the end of duty-free online shopping from U.S. retailers for purchases under $150—a significant shift in an era when e-commerce has become increasingly borderless.
As Michelle puts the final touches on new price tags for her imported products, she sighs. “The frustrating part is that we’re already competing with giants like Amazon. This just makes that uphill battle that much steeper.”
The government has promised to review the impact of the suspension after 12 months, but for businesses caught in the immediate crossfire, the damage may already be done.
