As the 2025 holiday shopping season kicks off, many small businesses outside the United States are finding it much harder to retain their U.S. customers. A major reason: the end of the U.S. “de minimis” import tax exemption – a shift that has sharply increased costs and created confusion at checkout. This story isn’t just about tariffs and fees – it’s reshaping cross-border ecommerce and threatening long-standing business relationships.
The end of the “de minimis” exemption
Until recently, many small parcels shipped to the U.S. from abroad qualified for a so-called “de minimis” exemption: if the value of the package was under US$800, it could enter the U.S. tariff-free and usually cleared customs without much hassle. For makers and sellers in Canada, the U.K., Australia, and elsewhere, this made it fairly simple to ship small items — from handmade yarn to specialty perfumes — to American buyers. Yahoo Finance
But on August 29, 2025, that exemption was eliminated under the current U.S. administration. The official rationale: to deter illicit trafficking and stop floods of low-cost goods from discount sellers (often from overseas) undermining domestic retailers. AP News
The practical result: every package — no matter how small — now faces customs scrutiny. That translates into new charges: brokerage fees from shippers, customs processing costs, tariffs, and often state-level taxes. For small sellers, that’s a huge blow.
Dramatic drop in U.S. sales for overseas sellers
For many cross-border businesses, the change has been devastating.
- Take Fleece & Harmony, a woolen mill on Prince Edward Island. A ball of yarn that used to cost US$21 now incurs $12–$15 in brokerage fees, plus a 6.5% tariff and state taxes — nearly doubling the delivered cost.
- At Digi Wildflowers, an Etsy shop selling embroidered items and quilts, U.S. sales — which once constituted ~70% of business — plunged. After adding a banner “U.S. Import Duties On Us,” sales began inching back up.
- A stationery brand in London (with some operations in Melbourne), Martha Brook, saw U.S. sales fall by ~30% year-over-year even though the seller absorbed the additional costs.
Some sellers report their American orders dropped by up to 70%.
For buyers too, the shock has been real. One U.S. customer bought a fragrance oil from a Toronto-based seller for US$35.75 — only to get hit with a $10.80 tariff at delivery. “It wasn’t worth the $10 tariff for a $27 purchase,” he said. AP News+1
Confidence, market shifts, and shipping fatigue
This isn’t just about costs. The removal of the exemption has undermined buyer confidence. Many U.S. customers now hesitate to purchase from foreign sellers — uncertain whether they’ll be hit with surprise duties at delivery.
In response, affected sellers are taking different — sometimes painful — steps:
- Absorbing fees themselves. Some are picking up the tariff to keep their prices stable for U.S. buyers. That cuts into margins and isn’t sustainable for all.
- Focusing on domestic markets. Many Canadian, Australian and European sellers are pivoting to their home-country customers. For example, Digi Wildflowers has been increasing marketing toward Canadian buyers.
- Diversifying fulfillment. Some are exploring U.S.-based print-on-demand or fulfillment partners — packing and shipping domestically to avoid cross-border tariff issues.
- Changing product strategy. Sellers are highlighting best-selling or higher-margin items, reducing variety to limit the volume of tariffed shipments.
The sudden shift has laid bare just how fragile a business can be when heavily reliant on one foreign market. As one seller put it, this has forced a long-overdue diversification — something that “will hopefully make my business stronger and more resilient in the long run.” San Francisco Chronicle
🇨🇦 What this means for Canadian businesses — especially near the border
For Canadian artisans and small businesses — especially in border cities like Windsor, ON — the timing couldn’t be worse. The holiday season, Black Friday, and Cyber Monday traditionally bring a surge in cross-border shopping. As a seller near Detroit, Windsor-based businesses — such as Digi Wildflowers — counted heavily on U.S. customers.
Now, many are watching those sales vanish. For some, the U.S. has become a risk, not an opportunity. At the same time, Canadian retailers are getting more attention from U.S. sellers looking to avoid cross-border hassles; as one industry observer recently noted, despite the turmoil, Canada “still works” for U.S.-based merchants exploring international sales. Practical Ecommerce
In border regions, this shake-up could ripple into slower cross-border commerce and fewer small shipments — potentially affecting local jobs, courier services, and cottage-industry economies.
Why the 2025 holiday season matters
Why has this change stirred so much disruption exactly as the holiday shopping season begins?
- Timing of the de minimis removal. The August 29 deadline gave sellers only a few months to adjust — too late for many to change shipping strategies or pricing.
- High reliance on U.S. buyers. For many small sellers abroad, U.S. sales accounted for a large majority of revenue. Losing or shrinking that base dramatically affects survival prospects.
- Holiday season amplifies impact. November through December typically makes up a significant chunk of annual revenue for small businesses. Facing higher costs or lost customers now threatens their entire year’s financial outlook.
- Global inflation and supply-chain fatigue. With recent supply-chain disruptions and global shipping cost increases, e-commerce already was under pressure. The new tariff regime adds fuel to the fire.
What’s at stake — who is affected
- Small makers, artisans, and boutique shops (handcrafted goods, specialty items, small-batch producers) — especially those that built a U.S. customer base over years.
- Cross-border sellers in Canada, the UK, Australia, Europe — anyone reliant on the prior de minimis exemption.
- U.S. consumers — who may see fewer cross-border options, higher prices, more friction at checkout, or abandon shopping from international sellers altogether.
- Shipping companies and fulfillment providers — facing increased complexity in customs, duty collection, returns, and customer support hassles.
- Global e-commerce marketplaces — platforms like Etsy and small independent shops may see shifts in cross-border activity, favoring domestic fulfillment or localized marketplaces.
Takeaways and what sellers can and should do now
For international sellers:
- Re-evaluate cross-border shipping strategies: consider using U.S.-based fulfillment or print-on-demand services.
- Be transparent with U.S. customers: clearly display tariffs and shipping fees before checkout to avoid surprises.
- Diversify target markets: invest more in domestic customers or other international regions.
- Adjust product mix: focus on higher-margin items or larger orders where tariffs and shipping make more sense.
For customers buying from abroad:
- Expect additional duties, brokerage, and possibly state taxes — especially during checkout or delivery.
- Compare with domestic alternatives: sometimes, buying from a U.S.-based seller may be simpler, even if price is slightly higher.
- When buying from small sellers abroad, check whether the seller pre-paid duties (“DDP”) — or whether you’ll be responsible at delivery.
For policy watchers and industry stakeholders:
- This change reveals how trade policy can ripple far beyond its original intent (e.g., curbing illicit imports) to deeply impact small businesses and cross-border communities.
- The disruption may drive long-term shifts: increased localization, more regional fulfillment centers, or even a decline in small-scale cross-border entrepreneurship.
A turning point for global small-business ecommerce
The abrupt removal of the de minimis exemption has shaken up cross-border ecommerce just as holiday shopping ramps up — and many small sellers are scrambling to stay afloat. What might have seemed like a niche policy tweak proves to be a major structural disruption for artisans, entrepreneurs, and cross-border commerce.
For Canadian sellers — especially those near the U.S. border — the changes come with real stakes. Some may survive by adapting: shifting fulfillment, retooling their business model, or pivoting toward domestic markets. Others may see their U.S. customer base shrink irreversibly.
In the end, this holiday season may mark a turning point — not just for individual shops, but for how global small-business commerce between the U.S. and the rest of the world operates.
