The clock is ticking for Canadian online shoppers and businesses as the federal government prepares to eliminate the de minimis exemption in early 2025. This seemingly technical tax change is poised to create ripple effects across Canada’s retail landscape, forcing businesses to adapt quickly or risk being caught unprepared when cross-border shopping becomes significantly more expensive.
“We’re looking at one of the most consequential shifts in Canadian retail in years,” says Michael Thompson, retail analyst at the Canadian Commerce Association. “Businesses that have relied on American suppliers without considering the tax implications are scrambling to restructure their supply chains.”
The de minimis threshold, which currently allows Canadians to import goods valued up to $150 without paying duties and up to $40 without GST/HST, has long been a competitive advantage for U.S. e-commerce platforms. Its elimination means Canadian consumers will face additional costs on virtually all cross-border purchases, regardless of value.
For Melissa Chan, owner of Vancouver-based Coastal Imports, the change represents both challenge and opportunity. “We’ve been competing against U.S. retailers who essentially get a tax advantage when selling to Canadians. While this levels the playing field, we’re investing heavily in new inventory management systems to handle the increased compliance requirements.”
The Canada Border Services Agency estimates that eliminating the exemption will generate over $300 million in additional annual revenue. Finance Minister Chrystia Freeland has defended the move as necessary to “create tax fairness” between domestic and foreign retailers.
Large retailers like Canadian Tire and Hudson’s Bay have publicly supported the change, with executives citing the potential to recapture market share lost to U.S. competitors. Meanwhile, Amazon Canada has announced plans to expand its Canadian fulfillment network by 15% before the exemption ends, positioning itself to minimize cross-border shipping for Canadian customers.
Small businesses face particular challenges. A survey by the Canadian Federation of Independent Business found that 68% of small business owners who regularly import products are concerned about increased administrative burdens, while 54% worry about cash flow impacts from paying duties and taxes upfront.
“The compliance costs are substantial,” explains tax attorney Priya Singh. “Businesses need to implement new procedures for customs declarations, understand harmonized tariff schedules, and potentially register for tax collection in multiple provinces. Many smaller operations lack the expertise to handle this in-house.”
Several technology solutions have emerged to address these concerns. Toronto-based startup ClearCalc has developed software that automatically calculates duties and taxes for imported goods, while major shipping companies like UPS and FedEx have expanded their customs brokerage services.
“We’ve seen a 40% increase in inquiries about our compliance tools,” says Jean-Marc Dubois, Vice President at Montreal logistics firm CanShip. “Smart businesses are preparing now rather than waiting until the deadline.”
Consumers can also expect changes in how online retailers present pricing. American companies selling to Canadians will likely adopt more transparent approaches showing all-in costs including duties and taxes at checkout—a practice already common in the European Union.
With just months remaining before implementation, the race is on for Canadian businesses to adapt. Those that successfully navigate the transition may find themselves better positioned in a retail landscape where the advantages of cross-border shopping have significantly diminished.
As retailers large and small prepare for this monumental shift, one thing is clear: the end of the de minimis exemption will transform how Canadians shop online and how businesses approach cross-border commerce for years to come.
