7 hours ago
- Business
- Winnipeg Free Press
Manitoba small business owners uncertain how to deal with loss of duty-free exemption
As the days to ship lower-cost parcels to the United States inexpensively come to a close, Manitoba small businesses are pausing their U.S. offerings and scrambling to beat new fees.
Leiah Bauer intends to disallow U.S. orders on Apothecandy's website beginning Aug. 18. She's sold her company's goat milk soap to American clients for the past 15 years.
'Those customers are loyal and wonderful customers,' Bauer said Friday. 'It's sad to tell them that I can't ship them some of their favourite products.'
She hasn't needed to consider duties in the past. Canadian exports under US$800 crossed the border duty free through legislation called the de minimis exemption.
U.S. President Donald Trump issued an executive order last month to suspend the global exemption; the pause begins Aug. 29.
Bauer joins local entrepreneurs confused by the change.
'Until I have a very clear picture of how this is going to work moving forward… I think the best course is to pause shipping to the United States,' she relayed.
American purchases consume at least 30 per cent of Apothecandy's orders. Bauer doesn't yet have a plan to make up the lost sales: 'This is all happening very fast.'
She announced the decision to customers, she said, after seeing fellow artisans do the same.
Eye and Ear Control Records, a vinyl mail-order company, has also halted U.S. exports. Owner Brad Skibinsky said Friday he's trying to understand the impact of the exemption change.
A percentage fee on his wares would be 'sustainable,' but a flat fee would be 'untenable.'
The U.S. executive order outlines varying new charges. Some goods sent through the postal service will be taxed with their country of origin's tariff rate.
In other cases, fees could range from US$80 to US$200, depending on the tariff rate at the package's country of origin. This option has a six-month timeline.
Overall, charges will differ by customs broker and the nature of work involved, said Alan Dewar, GHY International's executive vice-president.
Most low-cost packages were processed without customs declarations. Now they all will need declarations — and the increase is 'staggering,' Dewar wrote in a text.
The United States saw more than one billion de minimis entries in 2023. The number is a massive jump from the 153 million entries counted in 2015, a January U.S. Congressional Research Service report reads.
In 2016, the U.S. changed its de minimis exemption from US$200 to US$800.
Roughly 16 per cent of the Canadian Federation of Independent Business's 4,500 Manitoba members export to the United States. Most use the de minimis exemption.
'Every small shipment now faces these tariffs or customs paperwork and potential delays at the border,' said Tyler Slobogian, a senior policy analyst with the CFIB.
He's clocked businesses halting marketing campaigns in the United States and looking to sell elsewhere. The CFIB has publicly called on Ottawa to route money collected from its U.S. import tariffs to small businesses affected by the trade war.
Milena Lye, owner of skin care company Just the Goods, anticipates she'll need to increase prices as she continues selling to the United States.
Some customers may leave. However, the weaker Canadian dollar might keep products competitive, Lye said.
'I feel like I'm making skin care products for a community of friends. I don't want to cut them off,' she wrote in an email.
She's prepared to work overtime to help clients 'stock up' ahead of Aug. 29, she continued.
Natassia Bezoplenko-Brazeau is among the business owners shifting focus to other Canadian buyers. Northlore, her Winnipeg-based body care company, has inked new deals with retailers in Saskatoon and Ottawa.
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'It seems more worthwhile to turn my attention to,' Bezoplenko-Brazeau said. 'It's already been exhausting trying to keep up with it all.'
She's planning to inform her American customers their products will get more expensive — due to U.S.-imposed measures — via newsletter or website banner. Around 20 to 30 per cent of Northlore's online sales come from Americans, Bezoplenko-Brazeau estimated.
President Trump has cited fentanyl and other drug trafficking as the reason for pausing the de minimis exemption.
He halted the exemption for Chinese and Hong Kong imports in April. The move has affected Manitoba exporters who largely use parts from the two countries in their wares.
Gabrielle PichéReporter
Gabrielle Piché reports on business for the Free Press. She interned at the Free Press and worked for its sister outlet, Canstar Community News, before entering the business beat in 2021. Read more about Gabrielle.
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