‘An important source of income’: Small businesses worry as U.S. ends duty-free exemption

Canadian businesses face uncertainty as U.S. ends de minimis exemption.

Canadian small business owners are worried about the future of their U.S. sales following an executive order from U.S. President Donald Trump, which eliminated the de minimis exemption.

The exemption had allowed packages valued under US$800 to enter the United States duty-free, making it easier for Canadian businesses to access the U.S. market.

That door may now be closing, and many entrepreneurs are left scrambling for answers.

“We know that about a third of our members, which is probably very similar to the small business population overall, are using the $800 de minimis to send products to their customers in the United States,” said Corinne Pohlmann, executive vice-president of advocacy at the Canadian Federation of Independent Business (CFIB), in an interview with CTV News Channel Saturday.

“(The de minimis exemption) is used more often than people think, and it’s an important source of income for a lot of small companies who now have to rethink about how they’re going to deal with their U.S. customers.”

• What businesses are doing to brace for the end of the de minimis exemption

For businesses hoping to continue exporting to the U.S., one alternative may be leveraging the Canada–United States–Mexico Agreement (CUSMA).

The deal allows duty-free access for products manufactured or produced in Canada, the U.S. or Mexico, but as Pohlmann says, becoming CUSMA compliant isn’t necessarily easy.

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“You’re going to have to get certified for every product that you send into the United States, and the paperwork can be quite lengthy and complicated,” she said.

For companies looking to reduce their reliance on the U.S. market, alternatives exist but they may come at a cost.

Pohlmann says many businesses are considering other markets, including domestic and overseas buyers, but shipping costs and logistics make that shift challenging.

“Some of these businesses, 50, 60 per cent of their customers come from the United States, so it’s not an easy transition to make.”

Despite the uncertainty, some businesses are trying to adapt and manage the impact.

“Many are choosing to go ahead with it, trying to find compliance, or thinking about ways that they can work with their customers, to soften the blow of the extra cost coming their way,” Pohlmann said.

She also noted that there’s still a chance the executive order could be challenged or reversed, but for now, businesses need to prepare for the possibility that it’s here to stay.

“There’s always hope,” she said. “We just don’t know if this is here to stay or if it’s something that’s just a blip in time, but in the meantime, we have to deal with it, and that’s the best that we can do.”