As a logistics and trade professional, I want to ensure you are prepared for a significant change in the Canada-U.S. trade landscape. Effective as of August 29, 2025, the United States is eliminating the use of Section 321 for goods shipped from Canada.
For years, Section 321, also known as the de minimis exemption, has allowed Canadian businesses to ship orders valued at $800 USD or less to individual U.S. customers free of duties and taxes, using a streamlined, informal entry process. This change means that now, all shipments, regardless of their value, will be subject to formal customs clearance procedures, requiring the payment of applicable duties and taxes. This policy shift is intended to level the playing field for U.S. domestic businesses and increase customs oversight, but it represents a fundamental operational change for Canadian exporters who have built their business models around this provision.
How this will impact businesses
The businesses that will feel the most immediate and significant impact are Canadian e-commerce and direct-to-consumer (D2C) companies. If your business relies on shipping a high volume of low-value parcels directly to American households, your operations will be fundamentally altered. The cost advantages and shipping efficiencies gained from Section 321 will disappear overnight.
You can expect increased costs due to newly imposed duties, taxes, and mandatory brokerage fees for every single package. Furthermore, the transit times for your shipments will likely increase as they undergo a more rigorous, formal customs review process, potentially impacting customer satisfaction and your competitive edge against U.S.-based retailers.
What your business should do
Get a U.S. customs broker
To continue exporting successfully, your immediate and most critical action is to engage a reputable U.S. customs broker. This is no longer optional; a broker is now essential for filing the formal customs entries required for all your shipments.
Re-evaluate pricing and shipping policies
You must also urgently re-evaluate your pricing and shipping policies. You will need to determine how to manage the new costs: will you absorb them, or will you pass them on to your customers through higher prices or shipping fees? Being transparent with your U.S. customers about these new charges and potential delays at checkout will be key to managing expectations.
Explore logistics solutions
In the longer term, you may want to explore alternative logistics strategies, such as consolidating shipments and using a U.S.-based third-party logistics (3PL) partner for distribution, to mitigate the impact of this regulatory change.
We know this is a big change that’s impacting a lot of businesses and a lot of people. The Bullwhip Logistics team is here to help! Don’t hesitate to reach out for information and solutions for your distribution, shipping, courier, warehouse and logistics needs! We’re always available at info@bullwhiplogistics.ca and 204-202-5148, or send us a message here.
Philip, Owner, Bullwhip Logistics
