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US SUSPENDS DE MINIMIS DUTY-FREE TREATMENT

IMPORTS TO US NO LONGER BENEFIT FROM $800 DUTY-FREE LIMIT

Effective 12:01 a.m. (ET) on August 29, 2025, the United States (“US”) suspended the de minimis shipment exemption for goods imported from Canada, Mexico, and all other countries, marking a significant shift in cross-border trade rules.  The move, announced in a July 30, 2025 Executive Order by President Donald Trump, accelerates a policy change which had been expected in 2027.

This development will impact Canadian exporters who have relied on de minimis duty-free treatment to ship low-value goods to US consumers.  It will also impose new compliance obligations on carriers and exporters.

De Minimis Exemption Background – What is it?

Under 19 U.S.C § 1321, the de minimis exemption has allowed shipments valued at USD $800 or less per person per day to enter duty-free into the US.  This value was increased from $200 in 2016 in part to save on enforcement costs given the low prevailing tariff rates in the United States.

Many e-commerce and small businesses around the world – including Canada – began leveraging the de minimis to sell goods to US customers effectively duty-free. 

The US administration under President Trump has raised a number of concerns regarding de minimis treatment, including:

• de minimis shipments typically face lower scrutiny at the border, potentially serving as a channel for illegal goods; and
• The potential that de minimis shipments misrepresent the country of origin of the goods to avoid duties (e.g., Chinese goods transiting through Canada to the US and improperly declared as Canadian goods).

The removal of the de minimis exemption continues the wider US policy shift away from a duty-free environment for low-value goods that was initially started by eliminating the de minimis exemption for Chinese-origin goods.  It is also not entirely unexpected given that higher tariff rates change the economics of the de minimis threshold.

International Postal Shipments & Bond Requirements

Section 3 of the Executive Order imposes special rules for goods sent through the international postal network. Transportation carriers must choose between the following methods:

1. Ad Valorem Method: A duty equal to the effective IEEPA tariff rate applicable to the goods country of origin (35% for Canadian goods) on the value of each dutiable item; or
2. Specific Duty Rates: For the six months following August 29, 2025, a flat fee per item of either, $80, $160, or $200, depending on the IEEPA tariff rate for the country of origin of the goods. After six months all carriers must use the Ad Valorem Method.

Section 4 of the Executive Order also imposes the requirement of basic importation and entry bonds for informal entries valued at less than $2,500, and international carrier bonds will also be required for carriers transporting international postal shipments discussed above.

Takeaways

Canadian e-commerce and small businesses have lost the ability to ship low-value goods into the US without being subject to prevailing tariff rates effective August 29, 2025. 

Canadian businesses should consult with experienced trade professionals to consider whether they can benefit from preferential tariff treatment, and any other options to continue selling to US customers.

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