CALGARY — When Donald Trump announced last month he was ending the tariff exemption on low-value packages entering the United States, few noticed language in his order that deals a blow to Canada’s already struggling postal service.

Canada Post says that, under the U.S. president’s July 30 directive, its shipments to the U.S. don’t qualify for the exemption granted to products that comply with the United States-Mexico-Canada Agreement (USMCA).

The problems this poses came clear only this week after Trump’s order to suspend the “de minimis” exemption took effect on Aug. 29. Under de minimis, businesses around the world had been able to ship deliveries worth less than US$800 to the U.S. duty free. Now, those parcels face Trump’s 35 per cent tariffs on Canadian goods. With the end of the exemption looming, small Canadian businesses that sell into the U.S. had been scrambling to certify their shipments comply with the USMCA, which is also known as CUSMA, to benefit from the carve-out. 

Many learned only in the last few days they can’t claim the carve-out on products sent via the post office.

“CUSMA-originating goods from Canada and Mexico are not exempt from IEEPA tariffs for postal shipments,” Canada Post spokesperson Lisa Liu said in a statement, referring to the International Emergency Economic Powers Act, the law Trump has cited to justify most of his tariffs.

Liu pointed to Section 3 of Trump’s July 30 order, which lays out separate rules for parcels shipped to the U.S. through the international postal network. Unlike those sent through private couriers, postal shipments from Canada face either a 35 per cent tariff on the value of the package, or, for the next six months, a flat fee of US$200 per item. (A fact sheet released with the order states gifts worth less than US$100 can still cross the border duty-free, no matter the shipping method.)

The White House did not immediately respond to a request for information about why the international postal network was singled out. 

However, people with knowledge of cross-border trade say the move puts Canada Post at a serious disadvantage, as merchants switch to other shipping and delivery options. The language in the order for private couriers says only that those shipments face all “applicable” duties, meaning the carve-out for USMCA-compliant goods still applies. 

“They will have no commercial business to the U.S. now, moving forward,” said Jesse Mitchell, director of business development for Strader-Ferris International, a cross-border customs brokerage, shipping and logistics company that owns MyUSaddress.ca.

Though Canada Post didn’t say what the impact of the policy will be for its bottom line, it’s another blow to the service’s already strained relationship with small businesses. The postal service remains a go-to option for lots of sellers, especially those who need to reach rural areas, said Michelle Auger, senior policy analyst at the Canadian Federation of Independent Business.

But those businesses were forced to find alternative shipping methods during last year’s postal workers’ strike, a month-long labour disruption that cost Canada Post $693 million.

A recent survey of CFIB’s membership businesses shows 73 per cent rely on private couriers for parcel delivery as the organization called for more reliable service. 

The strike, and now Trump’s tariff order, only add to the service’s mounting financial woes. Canada Post hasn’t turned a profit since 2017 and reported a $1.3 billion operating loss in 2024. Parcel delivery revenue dropped $683 million compared to 2023, according to the annual report.

Canada Post partnered with U.S-based e-commerce company Zonos to help small businesses adapt to the de minimis changes by allowing them to pre-pay the duties on parcels to the U.S. and remit the tax on their behalf. 

Other shipping services, though, including FedEx and UPS, have offered customers help to avoid tariffs on USMCA-compliant shipments for an extra cost, Auger noted.

With files from Joanna Smith