A small brand landing a new international order, a loyal customer placing a repeat purchase, or sending product samples overseas are thrilling milestones for small businesses. However, a recent shift in trade regulations surrounding the term "de minimis" threatens to sap the excitement from these victories, placing significant strain on entrepreneurs and their ability to engage in cross-border commerce.
The de minimis rule serves as a critical threshold in international trade. If a shipment’s value falls below a certain amount, it can clear customs without incurring duties, allowing for faster delivery and reduced costs. This streamlined process enables small businesses to maintain competitive pricing while navigating the complexities of global trade. According to a Shopify survey from April 2025, one in five merchants utilize this exemption, with a significant portion heavily relying on it for their operations.
Lea Wieser, founder of the small fashion brand Arkitaip, exemplifies the stakes involved: “Most of our international orders are small… Without the de minimis rule, every one of those little parcels is treated like a big commercial shipment, with extra paperwork, unexpected fees, and potential delays at the border.” As countries reassess their regulations for small cross-border packages, entrepreneurs worldwide are feeling the impact of these changes.
The surge in online shopping over the past few years has escalated the demand for efficient cross-border trade. As consumers increasingly purchase items from around the globe, the volume of parcels crossing borders has grown into a significant revenue opportunity for debt-laden governments. However, this has led many countries to reconsider the de minimis thresholds, often to the detriment of small businesses. Recent changes have primarily focused on modernizing customs systems, collecting taxes on burgeoning e-commerce, and curtailing undesirable trade practices.
The implications for small businesses are concerning. New costs introduced by lowered de minimis thresholds can quickly add up, especially for businesses operating on thin margins. Victor Kabo, co-founder of the Swedish company Bookman, highlights this issue: “Small businesses like ours operate on thin margins—every additional fee and administrative requirement makes it harder to compete with larger companies that have the resources to absorb these costs.”
The adjustments in de minimis rules introduce a range of challenges for entrepreneurs:
-
Cost Implications: If the threshold is lowered or eliminated, entrepreneurs face additional duties, brokerage fees, and delays. The financial burden often lands disproportionately on small businesses compared to larger corporations that can absorb these costs.
-
Administrative Burdens: Small businesses must grapple with stringent compliance requirements. A simple error in shipment classification can result in costly penalties, crippling entrepreneurial endeavors.
- Market Competitiveness: Rising cross-border costs may force businesses to increase their prices, leading to decreased competitiveness in both foreign and domestic markets. Many small enterprises operate with profit margins between 10% and 20%, making them particularly vulnerable to unexpected costs.
Real-world implications of these changes can be significant. Packaging and materials sourced from abroad will become more expensive and slower to obtain, which could lead to higher prices for consumers, ultimately affecting overall sales. Small businesses that depend on trial runs for new products may find it challenging to experiment without incurring extra fees on each shipment.
Countries vary widely in their de minimis thresholds, reflecting differing trade policies and economic strategies. For instance, the United States recently ended its $800 de minimis threshold, requiring all imports to adhere to standard customs rules, while Canada maintains various exemptions for specific shipments. The European Union’s plan to abolish its duty exemptions poses further challenges for small enterprises that sell to European customers.
Despite these hurdles, there are avenues for improvement. Governments can utilize advanced technology to more effectively target suspicious shipments while avoiding burdens on legitimate, small-scale traders. Emphasizing tax collection without imposing additional duty charges on lower-value items could foster healthy trade while preserving vital pathways for entrepreneurs.
As these developments unfold, small business owners must remain adaptable and informed to navigate a complex landscape. The ongoing debate around de minimis regulations has significant implications for the future of small-scale entrepreneurship and the ability of new businesses to compete against established corporations. It’s essential to consider that stronger barriers to entry can stifle innovation and economic growth.
Maintaining pathways for straightforward, low-cost trade will benefit not just established small businesses, but also foster the future of commerce that starts with a single cart or click. For further details about the de minimis changes and their implications for small businesses, you can read the full press release on Shopify’s website here.
Image Via BizSugar
