Tax Insights: US de minimis shipment exemption eliminated for Chinese-origin goods ─ How will it affect Canadian businesses?

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Issue 2025-23

In brief

What happened?

On April 28, 2025, the US Customs and Border Protection (CBP) released a notice¹ that provides additional details on US President Donald Trump’s executive order² that, effective May 2, 2025:

• eliminates the de minimis shipment exemption for Chinese-origin goods³ imported into the United States, and
• establishes a new duty rate for international postal packages (containing Chinese-origin goods) that are sent to the United States through the international postal network

Why is it relevant?

Chinese-origin goods that are shipped to Canada for distribution to the United States will no longer be eligible for the de minimis shipment exemption and will instead be subject to duty rates that apply to those goods.

Actions to consider

Canadian businesses that rely on the de minimis shipment exemption when exporting to the United States should review their goods to ensure that any Chinese-origin goods are properly classified to avoid disruptions in their trade with the United States. They should stay informed of ongoing developments in this constantly changing tariff environment, including those relating to the de minimis shipment exemption, as the above changes could be expanded to include goods other than those of Chinese-origin.

In detail

The de minimis shipment exemption

The de minimis exemption permits shipments of goods with an aggregate fair market value of USD $800 or less per person per day to enter the United States duty‑free, with minimal information required. Over the past decade, the number of shipments using this exemption has increased from 140 million to over one billion annually. This increase is driven primarily by ecommerce platforms, especially those based in China, which take advantage of this exemption to ship large volumes of low-value goods, including textiles and apparel, into the US market. Issues raised by the US administration with respect to the current de minimis system include:

• difficulty enforcing US trade laws and health and safety standards
• challenges protecting intellectual property rights and consumer protection rules
• increased risk of illicit drugs entering the United States through these shipments

Duty rates for international postal packages

Chinese-origin goods (valued at US$800 or less) that are shipped to the United States through the international postal network, will be subject to one of the following two duty rates, as elected by the carrier:

• an ad valorem duty⁴ of:
  • from May 2, 2025 (12:01 am ET) to before May 14, 2025 (12:01 am ET), 120% of the value of the postal item
  • from May 14, 2025 (12:01 am ET), 54% of the value of the postal item, or
• a specific duty⁴ of $100 per postal item, starting May 2, 2025 (12:01 am ET)

The ad valorem or specific duty will replace any other duties that may apply to these goods, and no drawback will be available. The carrier must:

• collect and remit the duty (i.e. ad valorem or specific duty) monthly (or other periodic time frame as determined by the CBP)
• apply the same duty collection methodology to all shipments they deliver, but may change the methodology once a month (or other periodic time frame as determined by the CBP), upon providing 24 hours advance notice to the CBP

The takeaway

Canadian distributors of Chinese-origin goods to the United States will no longer be able to claim the de minimis shipment exemption and will therefore be subject to higher tariff and other costs, which could affect the pricing and competitiveness of these goods in the United States. These and other businesses that export to the United States should:

• review product classifications and ensure that products are correctly classified; misclassifying products could lead to delays or rejections at the border
• update shipping documentation and prepare to provide additional data for each shipment, including detailed product descriptions and tariff classifications; this will facilitate smoother customs clearance

Canadian businesses that handle shipments of Chinese-origin goods through the international postal network should review and understand these new rules to ensure they comply with them.

We can help your business navigate this current tariff situation. See our:

• Tariffs and Trade Policy Resource Centre for information to help your business assess and manage these tariffs
• Tariff relief: Unlocking government support for Canadian federal and provincial/territorial tariff-related support programs

^{1. US Customs and Border Protection “Notice of Implementation of Additional Duties on Products of the People's Republic of China Pursuant to the President's Executive Order 14256, Further Amendment to Duties Addressing the Synthetic Opioid Supply Chain in the People's Republic of China As Applied to Low-Value Imports” (April 28, 2025)}

^{2. Executive order “Further Amendment to Duties Addressing the Synthetic Opioid Supply Chain in the People’s Republic of China as Applied to Low-Value Imports” (April 2, 2025) and other executive orders that amend the April 2, 2025 order (released April 8, 2024, April 9, 2025 and May 12, 2025) at www.whitehouse.gov.}

^{3. “Chinese-origin goods” refers to goods originating in the People’s Republic of China, including Hong Kong and Macau.}

<sup>4. Executive order “Modifying Reciprocal Tariff Rates to Reflect Discussions with the People’s Republic of China” (May 12, 2025) at www.whitehouse.gov modified the duty rates in the April 28, 2025 CBP notice by:
- decreasing the ad valorem duty rate from 120% to 54% of the value of the postal item, starting May 14, 2025
- maintaining the specific duty rate at $100 per postal item (it was previously to increase to $200 per postal item on June 1, 2025)</sup>