Tax Insights: US eliminates de minimis shipment exemption ─ What it means for Canadian exporters

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Issue 2025-27

In brief

What happened? 

On July 30, 2025, US President Donald Trump signed an Executive Order¹ that, effective 12:01am ET on August 29, 2025:

• eliminates the de minimis shipment exemption for certain Canadian- and Mexican-origin goods and all other goods of global origin² that are imported into the United States, and
• establishes a new duty rate for international postal packages that are sent to the United States through the international postal network

Why is it relevant?

Goods that are shipped from Canada 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. This includes not only Canadian-origin goods, but also goods that are shipped from Canada and have a different country of origin. Elimination of the de minimis exemption will have a large impact on Canadian businesses, because of the expected US consumer reaction to higher priced imported goods (as duty-free exports of low-value goods to the United States will no longer be possible) and the increased compliance requirements to import such goods going forward.   

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 they are properly classified to avoid disruptions in their trade with the United States. Many global organizations have established e-commerce distribution systems from Canada to benefit from the de minimis program and duty-free entry to the United States. These companies should consider alternative methods of distribution, because it may become cost prohibitive to use the de minimis program starting August 29, 2025.

In detail

The de minimis shipment exemption

The de minimis exemption permits shipments of goods with an aggregate fair market value of US$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 significantly. Issues raised by the US administration with respect to the current de minimis system include:

• lower scrutiny standards by US Customs and Border Patrol (CBP) for packages using the de minimis exemption than for traditional imports
• use of de minimis shipments for illicit narcotics and weapons, and counterfeit items
• misrepresentation of certificates of origin for de minimis shipments to circumvent duties

Effective 12:01am ET on August 29, 2025, the de minimis shipment exemption is eliminated for certain Canadian- and Mexican-origin goods and all other goods on a global basis that are imported into the United States, and new duty rates are set for goods sent to the United States through the international postal network. Exemptions remain in place for up to $200 in personal items and bona fide gifts valued at $100 or less that American travellers are permitted to take with them duty-free when returning to the United States from abroad.

Duty rates for international postal packages

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 duty equal to the effective tariff rate applicable to the product’s country of origin under the International Emergency Economic Powers Act (IEEPA), or
• from August 29, 2025 to February 28, 2026, a specific per item duty, based on the effective IEEPA tariff rate applicable to the country of origin, as follows:    
  • less than 16%: US$80
  • between 16% and 25%: US$160
  • above 25%: US$200

After February 28, 2026, all international postal network shipments to the United States must comply with the ad valorem duty methodology. The ad valorem or specific duty will replace any other duties that may apply to these goods, and no drawback will be available.

US CBP is authorized to require a basic importation and entry bond for informal entries valued at US$2,500 or less. Any carrier transporting international postal shipments to the United States must have an international carrier bond to ensure payment of the duties.

The takeaway

Canadian businesses distributing 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
• ensure compliance with US CBP requirements, including potential importation and carrier bond obligations for shipments under US$2,500

Carriers must hold international carrier bonds, and exporters should be prepared for increased scrutiny and enforcement. Non-compliance with US CBP requirements may result in penalties, shipment delays or loss of import privileges.

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

• Tariffs, Trade and 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.  Executive Order “Suspending Duty-Free De Minimis Treatment for All Countries” (July 30, 2025) at www.whitehouse.gov.}

^{2.  A previous Executive Order already eliminated the de minimis shipment exemption for Chinese-origin goods imported into the United States. See our
Tax Insights “US de minimis shipment exemption eliminated for Chinese-origin goods: How will it affect Canadian businesses?.”}