NEW: Canada Hit With Extra Tariffs as De Minimis Ends

Trump tightens the clamp on Canadian imports and sets the stage for aggressive new enforcement. Here's what you can still do — while the window remains open.

Aug 06, 2025

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Dear friends

Sorry this post has taken a little longer than expected to reach you. Just as I published my last update, I realised that on 31 July, Trump had quietly dropped another complex and highly strategic Executive Order. Two, in fact — but so far, I’ve only had the opportunity to unpack this one.

Amendment to Duties to Address the Flow of Illicit Drugs Across Our Northern Border

This new EO expands on Trump’s existing trade penalties on Canada. While it’s framed as a response to the flow of fentanyl and other illicit drugs across the northern border, the structure, scale, and tone of the order suggest something broader and more political is at play.

The order increases tariffs on Canadian goods already penalised under earlier executive orders, and lays down extraordinary punishments for goods deemed to be avoiding those tariffs through trans-shipment (routing through other countries or mislabelling origins). It also quietly opens the door to removing de minimis exemptions for Canadian goods — the threshold that lets low-value items cross borders without being taxed.

Here’s a clear, step-by-step breakdown.

1. Backdrop: The Justification

Trump is claiming:

Canada is not doing enough to stop the flow of fentanyl and other drugs.
Canada is also retaliating economically, likely through its own tariffs.
He had previously declared a national emergency on this issue in Executive Order 14193.
He’d already imposed 25% tariffs on many Canadian goods, and 10% on Canadian energy.
Some exceptions had been made under the USMCA (the NAFTA replacement), including cutting potash duties from 25% to 10%.

2. What This New Order Does

Raises tariffs:

It increases the 25% tariffs to 35% on Canadian goods already covered under earlier orders.
This will hit Canadian exports hard, especially those not shielded by USMCA.

Targets trans-shipment:

Any Canadian good caught being “trans-shipped” — routed through another country or mislabelled to avoid tariffs — will be hit with a 40% tariff.
These goods may also face fines and additional penalties, with no room for reductions or mitigation by Customs and Border Protection.

Names and shames:

Every six months, a public list will be issued identifying countries and facilities involved in trans-shipment. That list will affect federal procurement, national security reviews, and commercial supply chains.

3. Wider Implications

Expanding Executive Power:

Trump is again invoking the International Emergency Economic Powers Act (IEEPA) — a law typically reserved for wartime, terrorism, or cyber threats — to justify trade penalties.
Unusually, the Department of Homeland Security (rather than Treasury or Commerce) is the lead agency, signalling a border security framing rather than an economic one.

Backstop de minimis mechanism:

The EO introduces a mechanism for excluding Canadian trans-shipped goods from any future de minimis treatment, via a newly added Harmonized Tariff Schedule heading: 9903.01.16
This clause may appear redundant given the 30 July global order, which suspended de minimis privileges across the board. But in fact, it functions as a backstop — in case parts of that global suspension are rolled back by courts, Congress, or international pressure
It also expands Customs’ power to prosecute trans-shipment fraud and assign origin-based penalties, even if general de minimis exemptions return

Tightens enforcement:

Homeland Security is granted full enforcement authority under IEEPA, extending beyond standard trade law
Goods that would typically receive exemptions — including those returned after repair or assembly abroad — will now be charged. That includes clothing, auto parts, and many other categories

4. Annex: The Fine Print in the Tariff Schedule

This section updates the Harmonized Tariff Schedule of the United States (HTSUS), which sets the official rates for all imports. It:

Replaces “25%” with “35%” wherever the earlier Canadian tariffs applied
Adds heading 9903.01.16, creating a 40% penalty rate for trans-shipped Canadian goods
Partially exempts some items — like personal-use goods and category 9802.00.80 (for US-made goods re-entering the country after assembly abroad) — though these are still partially taxed

Why These Executive Orders Coexist

At first glance, these two EOs seem to contradict each other on de minimis — but they’re designed to work in tandem:

The 30 July EO suspends the statutory privilege of de minimis treatment for all imports, citing national emergency powers under IEEPA
The 31 July EO updates the enforcement regime for Canada specifically. It ensures that, even if any form of de minimis treatment returns (such as for postal shipments or narrow exemptions), Canadian trans-shipped goods will remain excluded and face enhanced penalties

Think of the 31 July order as a legal patch — ready to cover any holes if the 30 July order gets challenged.

Why It Matters

This kind of layering suggests:

The administration expects legal, commercial, or diplomatic resistance to the global de minimis suspension
It’s trying to ensure Canadian goods — especially low-value e-commerce shipments — can’t slip through under any possible exemptions
What used to be a consumer-friendly loophole is now being tightly ring-fenced for enforcement

The Bigger Picture

On the surface, both of these EOs looks like a narrow trade enforcement move aimed at drugs. But in practice, they signal a major escalation in economic pressure on a close ally, pushing the US closer to a trade war with Canada — under the banner of national security, using emergency powers and sweeping tariffs.

These are not just trade moves. They’re warning shots to the rest of the world.

A Small Window for Action

The United States has suspended its long-standing de minimis exemption for low-value imports. From 29th August, the value of a shipment will no longer determine whether it’s exempt from customs duties. All imported goods — regardless of how small or inexpensive — will be treated as taxable, formal entries.

This change will bring immediate consequences: increased costs, longer delays, and more administrative requirements for importers, couriers, and consumers. It also signals a broader shift in how trade is regulated and monitored at the federal level, with expanded authority for customs enforcement and national security agencies.

However, there is still a very small opening that those who are prepared and able to act fast can take advantage of. Here’s how.

If You’re a US-Based Individual Buyer

If you regularly receive parcels from abroad — whether books, supplements, personal gifts, or niche goods not readily available in the US — these new rules will affect you. The long-standing exemption that allowed most low-value imports to arrive without duties is being dismantled, but for now, you still have a narrow window to adjust.

If there’s anything you’ve been meaning to order from overseas, do it now. For the moment, postal shipments are still being processed under the previous rules. That’s because US Customs and Border Protection has not yet published its updated procedures for international mail. Once those appear in the Federal Register, all imports — including those sent by post — will be subject to the new duties and fees.

Use national postal services wherever possible. If the sender abroad ships through their country’s regular post — such as Royal Mail, Canada Post, or Deutsche Post — your parcel enters the US via USPS. For now, that route is still exempt from the new customs enforcement system. Delivery may take longer, but it’s currently the lowest-risk option.

You should be aware that once the exemption ends, CBP may apply flat fees ranging from $80 to $200 per item on international postal shipments, depending on declared value, product category, and handling costs. Even low-cost items could carry heavy charges at the point of delivery.

Note on Canadian shipments: Imports from Canada are now subject to additional scrutiny, including steep penalties for mislabelled origin or trans-shipment through third countries. If you’re ordering from Canada, the risk of added enforcement — and higher costs — is especially high.

Avoid international courier services like DHL, FedEx, or UPS, unless you’re certain the item is already in the US. These carriers began collecting duties and handling fees on Chinese and Hong Kong shipments following the May suspension of de minimis for those countries. Starting 29 August, they will apply those same charges to all low-value imports. Even if you ordered before the deadline, packages in transit could be caught by enforcement systems once the new rules kick in.

Personal gifts under $100 remain exempt for now, but they must be clearly marked as gifts and sent person-to-person — not from a retailer. If you have trusted friends or family abroad, consider asking them to forward items on your behalf. If they repackage something as a personal gift and post it to you directly, it may still qualify for exemption while the threshold remains intact.

Similarly, travellers still have a $200 exemption when bringing goods home, though this may change.

Check whether recurring international subscriptions offer domestic fulfilment. Some international publications, supplement providers, and retailers already warehouse stock within the US. If so, you may be able to switch delivery options or avoid new customs charges by updating your settings.

Where duties are unavoidable, consider placing fewer, larger orders. This can reduce per-package courier handling fees and avoid multiple delays. It’s also worth scanning platforms for domestic resellers of specialist items, even if the price is slightly higher.

Monitor seller location and shipping method at checkout. Many platforms now offer international goods through US fulfilment centres, but they don’t always make that clear. Look for delivery timelines of 3–5 days or fine print like “Ships from US.” If you’re ordering something time-sensitive, it may be worth paying a little more to avoid customs delays entirely.

Check whether the item is available domestically. Some specialist products — particularly supplements, textiles, or books — are now stocked by US-based sellers on platforms like eBay or AbeBooks. Prices may be higher, but you’ll avoid the risk of new import charges or shipping disruptions.

There’s a very small window of exemption still open for postal shipments. It won’t last. But if there’s something you’ve been meaning to order — or someone abroad who can send it as a gift — act now, while postal shipments are still processed under the older rules.

If You Sell to Customers in the US

If you sell to US customers from outside the US, you’re now operating under a very different set of conditions. Whether you run a small online shop or a growing export business, these changes require a clear and measured response.

Start by communicating with your US buyers. Most people in the US have no idea this is happening. Let them know that new fees or delays may apply to international shipments, especially those sent by courier. Being open now can help prevent confusion or frustration later, and it builds trust in the long run.

Look into fulfilment partnerships inside the US. Some sellers are already moving inventory to domestic warehouses to avoid the new customs complications. If that’s not an option, you might consider routing through a third country with more favourable tariff treatment. Be aware, however, that this approach carries compliance risks and isn’t suitable for every business.

Sellers based in Canada should take extra care. The 31 July Executive Order introduces steep penalties for trans-shipment and expanded enforcement powers targeting Canadian imports. Even legitimate Canadian shipments may now face tighter scrutiny, especially if the origin of goods or packaging appears ambiguous.

Prepare for full customs declarations on every shipment. The old rules that let smaller items pass through with minimal paperwork no longer apply. All packages now require proper entry filings. The US system for this is called the Automated Commercial Environment (ACE). If you ship regularly, you may need to get familiar with its requirements, or work with someone who can handle it on your behalf.

Double-check your packaging and paperwork. Make sure your invoices match the contents, and avoid vague or overly generic product descriptions. US Customs is likely to scrutinise low-value shipments more closely under the new rules. If something doesn’t look right, your parcel could be flagged for inspection, or held at the border. In some cases, that could mean delays, added costs, or formal penalties.

While none of this makes it impossible to keep selling to American customers, it does raise the stakes. A little preparation now may help protect your access to the US market over the months ahead.

I hope this post has been helpful, and that it gives you a chance — however brief — to secure some of the books, subscriptions, and other items many of you have said you rely on or enjoy.

On Friday you’ll be hearing from my first guest writer during my vacation — David Salzillo, author of Salzillo’s Two Cents.

David is a lifelong resident of Providence, Rhode Island. At age 3, he was diagnosed with what was then called Autistic Disorder. A Brown neuropsychiatrist once predicted he would end up in an institution. Luckily for all of us, she was wrong.

Today, David is a 1L student at the Roger Williams University School of Law in Bristol, Rhode Island. Over the summers, he helps his father (also named David) with his federal workers' compensation law practice, which devotes itself to ensuring that injured federal workers receive what they deserve when they’re hurt on the job. Outside of that, David dabbles in as much as he can, including politics. Unfortunately, recent events have made that a necessity as well as a passion. He hopes that someday soon, politics will go back to being boring again.

David writes with urgency and unflinching moral clarity, but never loses his grip on strategic possibility. In his open letter to the EU, he lays out why appeasing Trump — even with clever manoeuvring — only strengthens the authoritarian machine behind him. With a blend of wit, foresight, and a firm grasp of the long game, he invites European leaders to choose resolve over retreat while there's still time to shift the balance.

You won’t want to miss it.

I’ll be back next week with another ‘hope’ post, which I’m aiming to publish on Sunday — a day that, from your feedback, seems to suit a more reflective read.

In solidarity, as ever

— Lori