OTTAWA — Sara Dudley, the CEO of The Sunscreen Company in Grimsby, Ont., was already bracing for a stressful time when the White House announced U.S. President Donald Trump would move ahead with steep tariffs on all Canadian goods.

Only the next day did she learn it meant the U.S. was also getting rid of the “de minimis” exemption for Canada, which allows goods worth less than US$800 to enter the country duty-free. 

The company she co-founded in 2008 sells mineral-based sunscreen and other skincare products. Online purchases from individual customers make up about half its sales. About 40 per cent of sales overall are on the other side of the border.

American customers are not used to taking out their credit cards and paying duties at the door. Dudley knew they would just buy their sunscreen elsewhere, saying, “I don’t want to take that risk.”

On Monday, the team went into overdrive, rushing as much product as possible by courier to its warehouse in Pottstown, Pa., about 600 kilometres away. Then came Trump’s 30-day tariff reprieve, but Dudley said she is not yet ready to relax. “I’m treating it like it will happen,” she said. “I don’t want to feel this sense of surprise.”

The term de minimis comes from a Latin phrase that means, roughly, not worth the hassle. Until 1913, tariffs were the greatest source of U.S. federal revenues, so the hassle could be costly. In 1938, Congress enacted an amendment to the tariffs law, known as Section 321, allowing anything worth under US$1 to enter duty-free.

Congress kept raising the value until it reached US$800 in 2016—far above inflation. In the 1990s, de minimis became recognized as a way to facilitate international trade, with the U.S. working it into trade negotiations. The fact that Canada had kept its own de minimis exemption so low—just C$20 at the time—was one of many sticking points during the talks that replaced NAFTA with the U.S.-Mexico-Canada Agreement (USMCA).

In 2015, there were 153 million packages that entered the U.S. through the de minimis exemption. Spurred by the fast-paced growth of e-commerce, including during pandemic shutdowns, that had climbed to more than one billion parcels by 2023. The volume and proportion of de minimis packages arriving from China also skyrocketed, especially after the first Trump administration brought in tariffs on a wide range of Chinese goods.

In June 2020, Robert Lighthizer, then Trump’s U.S. trade representative, told the U.S. Senate Committee on Finance that about 60 per cent of de minimis shipments in fiscal 2018 and 2019 were from China. “The disproportionately high volume of these shipments indicates China and others are likely exploiting the high U.S. de minimis threshold to avoid paying duties,” he said. Trump’s order for an additional 10 per cent tariff on Chinese goods, which took effect Tuesday, also gets rid of its de minimis rule.

There were also concerns that the large volume of goods, without much detail on the label, made it hard for customs officers to detect contraband. A story published on the website for the U.S. Customs and Border Protection had one customs officer recounting how he found a part for an AK-47 assault rifle hidden in chocolate sent from Russia.

They were also worried about fentanyl. Trump made that link in his executive order announcing tariffs on Canadian goods. The exemption, which had become a target for both Republicans and Democrats in Congress, was already under review before Trump returned. In the final week of Biden’s presidency, the Customs and Border Protection proposed new rules requiring more transparency as to the contents of certain de minimis shipments. It would also eliminate the exemption for goods being tariffed for national security reasons or to address unfair trade practices. The consultation period was to last 60 days.

Then suddenly, de minimis was about to disappear.

“Chaos is the best word to describe it,” said Dave Coulson, the chief operating officer of BorderBuddy, a Canada-U.S. customs brokerage. Coulson and his staff were already preparing for changes to the rules, but expected enough time to adjust supply chains. “We tried to do it in a day,” he said.

One irritant for the U.S. is the distribution centres that large online retailers have set up in Canada and Mexico, which they use to ship goods from countries such as China that would otherwise face tariffs in the U.S. Much of that stock is sold to individual customers below the de minimis threshold.

Dan Ujczo, an international trade lawyer based in Columbus, Ohio, who specializes in Canada-U.S. issues, said that is one reason de minimis will remain on the chopping block. “It’s a workaround,” he said. Even if Trump lets Canada off the hook next month, the White House trade policy memo published Jan. 20 orders federal agencies to review both the risks and the “loss of tariff revenues” associated with the de minimis exemption. 

It’s one of a series of directions by the White House suggesting the exemption’s days are numbered. The Jan. 20 order also launched an investigation into the flow of fentanyl from Canada, Mexico and China, while instructing agencies to assess the impact of USMCA, which was already up for review in July 2026. Each of those reports is due April 1. De minimis, Ujczo predicted, “will be a target [for] complete elimination in the USMCA.”.

Jim Kilpatrick, who leads global supply chain and network operations at Deloitte, said if Trump eliminates de minimis for Canada, smaller e-commerce companies will likely feel the impact first. Others can set up U.S. distribution centres and replenish their inventory in bulk, he said. That means they are paying the 25 per cent tariff on the wholesale rather than the retail price of that shipment. He noted online customers tend to compare prices from different vendors before deciding what to buy.

That is one of the reasons Dudley is worried, but the hardest part is not knowing what comes next. “It’s really hard to contemplate the fact that this 30-year trading relationship is just being flicked on and off like a light,” she said. “I don’t know how to operate with that level of uncertainty.”