Future uncertain for London merchant as U.S. looks to close little-known trade loophole

Matthew Trevithick · CBC News

· Posted: Apr 06, 2025 5:00 AM EDT | Last Updated: 9 minutes ago

Like galore tiny concern owners successful Canada, Rick Ho is uncertain astir the future.

The Londoner's company, Echo Sales, specializes successful mailing confections to U.S. retailers similar convenience stores and state stations — confections that are everyplace successful Canada, but hard to find stateside.

It's a concern that's been mostly imaginable acknowledgment to a little-known commercialized loophole known arsenic the de minimis customs exemption.

The exemption, archetypal enacted successful the late 1930s, waives modular customs procedures and tariffs connected goods worthy little than $800 shipped into to individuals successful the U.S. It's a loophole the U.S. is present looking to close.

It waives modular customs procedures and tariffs connected goods worthy little than $800 that are shipped into the U-S to individuals.

"If they driblet the de minimus exemption, my concern volition travel to an end, due to the fact that each the transactions are comparatively small," Ho said.

"Even if they passed duty-free but were applied the aforesaid scrutiny arsenic different transactions, meaning they had to person a due customs clearance, the $75 to $150 successful brokerage fees connected a $300 to $500 bid automatically makes it economically unviable."

On Wednesday, U.S. President Donald Trump signed an enforcement bid impacting goods from China and Hong Kong starting May 2. He said he plans to region the exemption for different nations erstwhile the authorities certifies it has the resources to inspect the influx of shipments.

Trump had signed an archetypal bid ending the exemption for Chinese goods successful February, but paused it aft national agencies were overwhelmed by a tidal question of packages. The White House estimates much than 4 cardinal packages participate the U.S. each time nether de minimis.

For Ho, Trump's plans enactment him betwixt a stone and a hard place. 

Ninety per cent of his measurement is U.S. sales, mostly successful packages nether $800. Selling to Canadians is impractical arsenic the products are already here, and precocious shipping costs enactment planetary markets retired of reach. "Anything little than a 40-foot shipping instrumentality doesn't marque sense," helium said.

He's hopeful the U.S. volition alteration people aft seeing however overmuch resources volition apt beryllium needed to cod tens of dollars connected a $300 order.

The de minimis exemption allows radical to bring successful oregon vessel up to $800 US worthy of goods per recipient per day. It besides includes goods purchased successful Canada and driven crossed the border, though the U.S. has said determination volition beryllium an objection connected "products for idiosyncratic use" successful someone's luggage.

The caput of the Canadian Federation of Independent Business says de minimis has been an vantage to galore Canadian merchants, particularly those whose concern is built astir selling to U.S. customers.

"Just the uncertainty astir this has caused its ain chilling effect connected economical growth. Are these businesses inactive going to beryllium capable to beryllium successful that fashion?" helium said. 

Canadian companies shipping products stateside that come from China oregon Hong Kong could beryllium deed hardest, facing customs duties, U.S. tariffs connected products from China, and U.S. tariffs connected each imports, wiping retired immoderate imaginable profit.

"For some, this volition marque their concern nary longer viable, and that is evidently a great, large worry," Kelly said. "It's understandable the U.S. wishes to reappraisal this, but we're definite hoping Canada tin support preferred entree connected this arsenic portion of our commercialized agreement."

America's de minimis threshold is the highest successful the world, and increased from $200 successful 2016. Canada's threshold varies — $150 for customs duties, $40 for taxes connected courier shipments from the U.S. and Mexico, and $20 for goods from different countries. 

The precocious U.S. threshold has been well-used by e-commerce firms, including China-based AliExpress, Shein and Temu, which person rapidly expanded successful the U.S. In 2023, much than 1 cardinal packages came done U.S. customs, compared to 134 cardinal successful 2015.

Revising de minimis has seen bipartisan support, including from erstwhile President Joe Biden, citing the detonation successful Chinese imports and concerns of exploitation to determination contraband, said Preetika Joshi, an adjunct prof astatine McGill University's Desautels Faculty of Management.

"I truly don't deliberation we tin blasted them for relooking and removing this exemption," she said amid those concerns, comparing their de minimis threshold to different countries. 

She notes galore unanswered questions stay astir it each could play out, and what would beryllium impacted, for example, if a Canadian merchant sold necklaces to U.S. customers utilizing beads imported from China.

"We don't truly cognize what the satellite bid is going to beryllium similar ... months from now. But determination is accidental successful each of this. An accidental to fortify our country, our economy, our commercialized policies," she said.