Your Guide to Section 321 for Canadian E-commerce | SPExpress
Unlock the US market with SPExpress. Learn how Canadian and Quebec-based e-commerce businesses can leverage Section 321 for cost-effective, streamlined shipping to the United States.
As of August 29, 2025, the United States has suspended the duty-free “de minimis” threshold of US$800 for all countries, including Canada. This means that all postal shipments to the U.S. will now require prepaid duties before crossing the border, regardless of their value or country of origin. This is a significant change from past laws that would affect Canadian businesses shipping to the United States.
Please note: The information presented in this article was written before this change and reflects the previous state of Section 321. We will be updating this article with more information on how to navigate these new regulations.
SPExpress is a trusted fulfillment partner that delivers seamless multichannel order fulfillment services to leading brands. Contact our team today to learn how we can help you optimize your hybrid fulfillment strategy.
SPExpress is committed to supporting your order fulfillment needs, regardless of the size of your online store. Our expertise and resources can help you optimize your order fulfillment strategy and achieve your business goals.
At SPExpress, we offer efficiency, scalability, and comprehensive shipping and warehousing solutions to businesses of any size, easing the burden on businesses. Get in touch with us right now to find out how our fulfillment and warehousing services may help your company. Don’t let inventory problems ruin your company; work with us to find dependable, effective solutions that give you more control. We are ready to take your order fulfillment game to new levels.
Contact us today to learn how we can assist you with your inventory management and order fulfillment strategies. Together with our experts, you can start on the path to reliable and efficient inventory management right now.
Section 321 Has Ended: What Canadian E-commerce Businesses Should Know
Why the Removal of Section 321 Changes Everything for Canadian E-commerce
For years, Canadian and Quebec-based e-commerce businesses viewed the United States market as a land of great opportunity, made accessible by a crucial piece of trade legislation: Section 321. This provision, also known as the “de minimis” exemption, allowed shipments valued at US$800 or less to enter the U.S. duty-free, a policy that became the backbone of many cross-border e-commerce strategies. It was a game-changer, leveling the playing field and enabling small to medium-sized enterprises (SMEs) to compete effectively with their American counterparts by offering attractive pricing and streamlined delivery.
However, as of August 29, 2025, this era of friction-free trade has come to an abrupt end. The U.S. government has officially eliminated the Section 321 exemption for all countries, a move that fundamentally reshapes the landscape of North American e-commerce and presents a significant new challenge for Canadian sellers who have built their business models around this critical advantage.
This policy shift is arguably the most significant cross-border trade development in decades, and its impact cannot be overstated. Businesses that once shipped countless small parcels south of the border without a second thought for customs duties must now confront a new reality where every shipment, regardless of its value, is subject to duties, taxes, and a more complex importation process.
For many Canadian online sellers, this change is not just an inconvenience but a direct threat to their business viability, forcing a complete reevaluation of their U.S. market strategy. Companies, especially those in competitive, low-margin sectors like apparel, accessories, and consumer goods, must now account for tariffs that could add a significant percentage to their products’ final cost, making them less attractive to price-sensitive U.S. consumers. The simplicity and cost-effectiveness that defined cross-border shipping for years have been replaced by a landscape fraught with new financial and logistical complexities.
The ripple effects of this decision are being felt across the entire Canadian e-commerce ecosystem. Many small businesses, from Etsy artisans to Shopify entrepreneurs, have expressed fears for their survival, with some temporarily halting U.S. shipping altogether to navigate the uncertainty. The administrative burden alone is a major hurdle; what once required minimal paperwork now demands formal customs entries, accurate tariff classifications (HS Codes), and a deeper understanding of international trade regulations. This shift disproportionately affects SMEs, which often lack the dedicated resources and in-house expertise to manage these new compliance demands.
In this challenging new environment, the role of a strategic logistics partner has become more critical than ever. Third-party logistics (3PL) providers like SPExpress are on the front lines, helping businesses navigate this new reality. By offering expertise in customs brokerage, duty and tax calculation, and streamlined shipping solutions, a knowledgeable 3PL can mitigate the disruption and provide a clear path forward. As Canadian businesses grapple with this monumental change, adapting quickly and strategically will be the key to preserving and growing their valuable U.S. customer base in a post-Section 321 world.
Understanding the Financial & Operational Impact on Your Business
The elimination of the Section 321 de minimis exemption has thrust Canadian and Quebec e-commerce sellers into a challenging new operational reality. The financial implications are the most immediate and stark. Previously, a US$100 product could be shipped to a U.S. customer with no duties attached; now, that same product will incur duties, which could be as high as 35% for many Canadian-made goods, plus brokerage fees.[
This sudden increase in the landed cost—the total price of a product once it has arrived at the buyer’s door—forces businesses into a difficult position. Do they absorb the extra costs, thereby shrinking already tight profit margins? Or do they pass them on to the customer, risking a significant drop in sales volume as their products become less competitive against domestic U.S. alternatives? This pricing dilemma is a critical strategic decision that will define the success or failure of many Canadian businesses in the U.S. market moving forward.
Beyond the immediate financial sting, the operational hurdles are equally, if not more, daunting. The era of simplified, low-documentation shipping is over. Every single U.S.-bound shipment now requires a formal customs entry, a process that is far more complex than the previous manifest clearance. This involves correctly identifying each product with a specific Harmonized Tariff Schedule (HTS) code, accurately declaring the country of origin, and preparing detailed customs paperwork. Errors or inaccuracies in this documentation can lead to significant consequences, including shipment delays, rejections at the border, financial penalties, and increased scrutiny from U.S. Customs and Border Protection (CBP) on all future shipments.
For many SMEs, this introduces a level of administrative complexity they are simply not equipped to handle in-house. The time, resources, and specialized knowledge required to manage customs compliance on a shipment-by-shipment basis can quickly overwhelm a small team, diverting focus from core business activities like marketing, customer service, and product development.
Furthermore, this new regulatory landscape fundamentally alters supply chain and inventory management strategies. Businesses that relied on a “just-in-time” fulfillment model from a Canadian warehouse to U.S. customers may find it too slow and costly now. The additional time required for customs clearance can extend delivery windows, negatively impacting customer satisfaction in an age where fast shipping is a key differentiator. This has led many to reconsider their entire fulfillment strategy. Is it more cost-effective to continue shipping from Canada and manage the new duties, or is it time to explore U.S.-based fulfillment? Moving inventory into a U.S. warehouse eliminates the cross-border friction for individual orders but introduces new complexities, such as freight shipping, U.S. warehousing costs, and managing inventory in another country.
The end of Section 321 is not just a change in a customs rule; it is a trigger for a top-to-bottom rethinking of how Canadian businesses operate, price their products, and service their primary export market. Navigating this new reality requires a proactive and informed strategy, utilizing knowledge to save costs while maintaining a consistent customer experience.
Strategic Solutions for a Post-Section 321 World: DDP, CUSMA, and US Fulfillment
The removal of the Section 321 exemption demands a decisive strategic pivot from Canadian e-commerce businesses. While the challenges are significant, proactive solutions exist that can mitigate the impact and even create new efficiencies. The most crucial immediate strategy is the adoption of Delivered Duty Paid (DDP) shipping.
Unlike the alternative, Delivered Duty Unpaid (DDU), where the customer is surprised with a bill for duties and taxes upon delivery, DDP integrates all costs at the point of sale. This means the customer sees the final, landed price at checkout, eliminating friction and preventing the negative experience of unexpected fees. Leading carriers and logistics partners are now offering streamlined DDP solutions, often involving a partnership with a customs broker to pre-calculate and prepay all duties before the shipment even reaches the border, ensuring a smooth and predictable delivery process for the end customer. While this requires sellers to manage the duty costs, it preserves the customer relationship and is quickly becoming the new standard for professional cross-border e-commerce.
A second, powerful tool in the arsenal for Canadian sellers is the Canada-United States-Mexico Agreement (CUSMA). It’s critical to understand that the end of Section 321 does not nullify the benefits of CUSMA. Goods that are certified as “originating” in North America (i.e., manufactured in Canada, the U.S., or Mexico) may still be eligible for duty-free entry into the U.S., though they will now be subject to brokerage fees and require formal clearance.
For businesses selling products made in Canada, this is a massive advantage. However, unlocking this benefit requires diligence. Sellers must be able to provide proper documentation, such as a Certificate of Origin, to prove their goods qualify under CUSMA’s complex rules of origin. This paperwork can be intricate, and failure to comply can result in the loss of duty-free status. This is another area where partnering with a 3PL provider like SPExpress, which has deep expertise in CUSMA compliance, is invaluable. We can help businesses navigate the documentation requirements, ensuring they can rightfully claim their duty-free advantages and maintain a cost advantage over competitors selling non-CUSMA-qualified goods.
For businesses with significant and consistent U.S. order volume, the end of Section 321 makes a compelling case for U.S.-based fulfillment. By bulk-shipping inventory to a strategically located warehouse in the United States, Canadian companies can transform their fulfillment model. Once the inventory is stateside, individual orders are fulfilled domestically, completely bypassing the order-by-order cross-border customs process. This strategy offers two major advantages: faster delivery times for U.S. customers and potentially lower overall shipping costs.
While there is an initial investment in freight shipping and U.S. warehousing, the elimination of individual brokerage fees and the ability to access cheaper domestic shipping rates can lead to significant long-term savings. This approach effectively allows a Canadian company to operate like a domestic U.S. seller, enhancing its competitive position. The decision to adopt a DDP model, leverage CUSMA, or transition to U.S. fulfillment—or a hybrid approach—will depend on a business’s specific product mix, order volume, and long-term growth objectives. In this new era of cross-border trade, a one-size-fits-all approach is no longer viable; a tailored, strategic, and properly directed logistics plan is the only way to ensure long-term success.
SPExpress: Your Strategic Partner in the New Era of Cross-Border Trade
Following the dramatic shift produced by the deletion of Section 321, simply being a “shipping company” is no longer sufficient. Canadian and Quebec e-commerce businesses need a true logistics partner—a guide with the expertise, technology, and strategic foresight to navigate the complexities of the new cross-border landscape. At SPExpress, we are not just a service that moves boxes from point A to point B; we are a dedicated team of cross-border specialists committed to ensuring your business not only survives but thrives in this new regulatory environment. Our entire suite of services has been optimized to address the specific challenges brought on by the end of the de minimis exemption, providing you with a clear, compliant, and cost-effective path to the U.S. market.
Our premier solution for the post-Section 321 world is SPExpress Delivered Duty Paid (DDP) service. We have invested heavily in the technology and customs brokerage partnerships necessary to make DDP shipping seamless for our clients. Our system integrates directly with your e-commerce platform to provide accurate, real-time calculations of all applicable duties and taxes at checkout. This transparency is vital for building trust with your U.S. customers, as it eliminates the surprise fees that can lead to cart abandonment and customer complaints. Behind the scenes, we manage the entire customs clearance process, from preparing the necessary electronic documentation to remitting the duties to U.S. Customs. This meticulous, proactive approach ensures your shipments clear the border without delay, maintaining the fast and reliable delivery experience your customers expect. With SPExpress managing the complexities of DDP, you can focus on your business, confident that your cross-border logistics are fully compliant and optimized for customer satisfaction.
Furthermore, we are experts in navigating the nuances of the Canada-United States-Mexico Agreement (CUSMA). We understand that for many of our clients, particularly those manufacturing goods in Canada, CUSMA is the most powerful tool for mitigating the financial impact of Section 321’s removal. Our team provides invaluable guidance on CUSMA’s rules of origin and documentation requirements. We work with you to ensure your products are correctly classified and that you have the necessary paperwork, like Certificates of Origin, to claim duty-free status wherever applicable.
For businesses considering a move to U.S. fulfillment, SPExpress offers a streamlined and scalable solution. We can manage the complexities of freight forwarding your inventory into the U.S. and provide state-of-the-art warehousing and fulfillment services through our network of U.S.-based partners. This allows you to position your products closer to your customers for faster, more affordable domestic shipping. Choosing SPExpress means choosing a partner invested in your long-term success. We provide more than just logistics; we provide the strategic guidance, robust technology, and operational excellence needed to conquer the new challenges of cross-border e-commerce and unlock sustainable growth in the U.S. market.
Read more:
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SPExpress is a trusted fulfillment partner that delivers seamless multichannel order fulfillment services to leading brands. Contact our team today to learn how we can help you optimize your hybrid fulfillment strategy.
SPExpress is committed to supporting your order fulfillment needs, regardless of the size of your online store. Our expertise and resources can help you optimize your order fulfillment strategy and achieve your business goals.
At SPExpress, we offer efficiency, scalability, and comprehensive shipping and warehousing solutions to businesses of any size, easing the burden on businesses. Get in touch with us right now to find out how our fulfillment and warehousing services may help your company. Don’t let inventory problems ruin your company; work with us to find dependable, effective solutions that give you more control. We are ready to take your order fulfillment game to new levels.
Contact us today to learn how we can assist you with your inventory management and order fulfillment strategies. Together with our experts, you can start on the path to reliable and efficient inventory management right now.