Pay higher fees or lose US buyers? Some Canadian retailers forced to choose between holiday sales
With no longer duty-free shipping of small packages in the US, Canadian online retailers will have to make a tough gamble: pay expensive fees on low-value shipments, or get a boost of holiday sales from US customers?
For nearly a century, international packages valued at less than $800 US could enter the US duty-free under the de minimis exemption. That policy ended in August when an executive order from President Donald Trump took effect.
At the time, the choice was clear for some businesses.
“We didn’t ship to the United States for about three months,” said Jessica Sternberg, owner of Free Label Clothing, a Vancouver-based online clothing store. But it had “a huge impact on our trade because about 50 percent of our trade comes from the US”.
Now, it’s the holiday season — and Sternberg’s small business, like many others, is relying on boosting online sales to offset losses. Also, shipping to US buyers is more expensive in the long run,
“We’re working very hard to stay above water,” he said. “It’s very unrealistic to expect people who are running a small business and doing a million different things to know everything about exporting.”
‘We basically alienated half our customers’
The end of the minimum exemption has been a “huge adjustment” for small businesses, said Samuel Roscoe, a professor of business education at the University of British Columbia.
“Many of them had to run around and find different ways to circumvent customs duties and fees,” he said.
An e-commerce business may add the fee to the total checkout cost, or US buyers may pay the fee themselves upon delivery. But in the latter scenario, if the buyer doesn’t pay, the Canadian retailers who shipped them may risk returns or surprise fees.
Back in August, the Canadian Federation of Independent Business survey Its 3,315 members, 31 percent of which are small and medium-sized businesses, say they will be directly or indirectly affected by the end of the minimum exemption.
The US has announced it is ending a long-standing trade policy – the de minimis waiver – which has left it difficult to navigate for businesses dealing with yet another trade disruption.
According to Roscoe, those who could not get their goods compliant under the Canada-U.S.-Mexico Trade Agreement (CUSMA) – or who could not pay a customs broker for guidance – may have decided to stop shipping to the U.S. altogether.
Others have had to get creative, opening distribution centers in the U.S. where they can ship bulk packages from Canada rather than paying brokerage fees on smaller packages individually, Roscoe explained.
Sternberg himself had to get a little creative. His business now allows US customers to place orders once a week on a Sunday – giving his team the rest of the week to complete the necessary paperwork.
Still, he’s worried that those American buyers may have already moved on after his site was down for months.
“We’ve basically alienated half our customers and are hoping they come back to shop this one day for our only sale of the year,” he said. Their annual sale spans several days, but only hits on one Sunday.
“And this – as most small businesses experience – this one sale is going to make up the majority of our profit for the year, so it’s a big problem.”
“I’m hoping we’ll get a lot of traffic that day for Americans, but even more so, I’m hoping our Canadian customers come and visit for us.”
Business owner says US buyers offer to reimburse fees
A small business owner who stopped shipping to the US before the minimum discount expired says he is getting a surprise offer from US customers.
“I got the email saying they’ll pay duties and they’ll figure it out,” said Katherine Choi, who runs Hanji Gifts, a trio of South Korean-themed gift shops in Toronto.
Choi had decided months ago that – amid the imposition of US tariffs and the constant threat of postal strikes – she would no longer risk shipping to the US.
That hasn’t stopped American customers from asking him. But it has not opted to reverse its policy – and with the end of duty-free shipping it is even more reluctant to do so.
“The more I looked into it and the more complex it became – it’s very busy,” he said. She may see Americans trying to make purchases on her site, and abandon their carts when they realize they can’t checkout.
The walls of her shop on Toronto’s Queen Street are lined with elaborate Christmas cards, stocking stuffers and a 2026 agenda. While Choi will make most of her holiday sales from Canadian customers shopping in the store, she knows she’s losing out to American shoppers surfing the Web for deals.
“Our online sales are higher than they were last year. So I know if we were able to ship to the states they would be even higher,” she said, adding that she would reconsider shipping to the US if things went back to the way they were.
Professor Roscoe called small and medium-sized enterprises the “backbone” of the Canadian economy because they employ so many people across the country.
“If their business and their profit margins are impacted, their employees are impacted. They hire less people. And then you kind of have an impact,” he explained.
“So just removing that one exemption would impact the entire Canadian economy.”
