Small businesses in Manitoba are bracing for an impact to U.S. shipments ahead of a policy change set to take place later this week.
Parcels sent to the U.S. from outside the country worth US$800 or less are currently spared from any import taxes under the long-standing de minimis exemption, but starting Friday, that exemption will end.
“It’s certainly going to cause a lot of harm for small retailers who were able to ship goods to a U.S. customer base,” said Brianna Solberg, director of provincial legislative affairs with the Canadian Federation of Independent Business (CFIB).
The policy change comes after an executive order signed by U.S. President Donald Trump in July, which now subjects imported goods that fell under the exemption to “all applicable duties.”
Solberg said 30 per cent of CFIB member businesses said they anticipate being impacted, while another 33 per cent said it’s too early to tell and they’re not sure.
“And that’s very alarming,” said Solberg. “That means there’s so much uncertainty in the air, and it makes it really difficult for businesses to plan. You know, are we going to have to raise our prices, or will we be able to absorb these costs?”
Anna Hunter, co-owner and operator of Long Way Homestead in eastern Manitoba, said approximately 40 per cent of her company’s shipments went to the U.S.
The part-sheep farm business with a focus on wool production suspended shipments to the U.S. starting last Monday. “That’s going to be a huge hit for our business and also many businesses that are similar to us,” said Hunter.
Hunter said one of the reasons to suspend U.S. shipments was “in the absence of a very clear idea of … the cost,” adding that shipments to the country will be suspended “until we have a more clear way forward.”
Solberg said it’s not clear how much Canadian business owners are going to be charged without the exemption and whether goods that are CUSMA-compliant are still going to be tax-free.
“And we’re hearing that same frustration and concern and lack of clarity from our members,” said Solberg.
“The reality is that I already know small businesses that have closed as a direct result of this,” said Ash Alberg, owner of Sunflower Knit, which sells naturally dyed yarns and skin products.
Alberg has also halted all U.S. orders, adding that they made up nearly 55 per cent of the small business’s shipments.
“We have postal disruptions, and then we have this, and it’s just like, how much longer do you expect folks to be able to handle it?” said Alberg.
In a statement from Canada Post, the Crown corporation said the new policy means imported goods will be subjected to an ad valorem duty, equivalent to the tariff rate that applies to the product’s country of origin under the International Emergency Economic Powers Act. Canada Post said the current rate is 35 per cent for most goods from Canada.
Documents and gifts under $100 sent from Canadians—not businesses—will be exempt from the duty, according to the Crown corporation.
Canada Post said it has partnered with Zonos, a third-party technology provider that will “collect duties and remit them directly to U.S. Customs and Border Protection.”
‘Catastrophic loophole’: White House
According to a White House publication, the duty-free de minimis treatment was suspended to close a “catastrophic loophole” that was used to “evade tariffs and funnel deadly synthetic opioids as well as other unsafe or below-market products” into the U.S.
The de minimis—which is Latin for lacking significance or importance—exemption started in the U.S. in 1938 to save the government the time and expense of collecting duties on imported goods valued at US$1 or less. Over time, the eligibility cutoff was raised.
“President Trump is delivering on his promise to ‘put an end’ to the ‘big scam’ of de minimis shipments killing Americans and hurting U.S. businesses,” reads the White House publication.
In May, the U.S. suspended de minimis treatment for packages from China and Hong Kong.
“Ultimately, we can’t control what the US does in terms of policy, but we can control how we respond here in Canada,” said Solberg, “and I think business owners are looking for support from our own government, recognizing that this change largely stacks the odds against small firms.”
-With files from The Associated Press
