Some local businesses optimistic, others calling it quits as duty-free U.S. shipping ends

The de minimis exemption for cross-border shipments to the United States ended Friday, and London-area small businesses with American customers are concerned what it could mean for their sales.

The exemption, which dates back almost a century, allowed goods under $800 US to cross the border with no extra fees. But a July executive order by U.S. President Donald Trump is now in effect, ending the exemption worldwide.

Those shipments will now be subject to duties of up to $200 US, depending on the country of origin, and Canadian small businesses with American customers will be smacked with extra costs that eat into their profits.

For Daniel Phillips, owner of the London-based clothing shop Illbury and Goose, the ups and downs of US trade this year have been challenging to keep up with.

"With these things actually being in place now, it's kind of a learning curve every day," he said. "We've got to think on our toes and be nimble and see what we can do."

While U.S. customers are not their main base, some products sell pretty well there, like t-shirts and hoodies, and lately the store has been getting a lot of U.S. orders for their soap products, Phillips said.

All of these orders fell under the cut-off amount for the de minimis exemption, and would now be subject to duties. Phillips is hoping a lower Canadian dollar will still make their products appealing to American customers, even with the inclusion of fees.

"Hopefully there are customers who are loyal there and are going to still want the product or still be able to get it," he said. "If they want to keep purchasing, it's just that extra little fee. It's kind of the way the world's going right now, right?"

Others businesses are not so optimistic. Pierre Oliver is the owner of Yarmouth Model Works, a model train manufacturer in St. Thomas, and 95 per cent of his roughly 5,000 customers are based in the U.S.

Earlier this month, he temporarily suspended sales across the border, and then recently decided to close up shop permanently.

"On Tuesday morning I woke up and I went 'you know what? This is no longer worth it,'" Oliver said. "I have zero interest in fighting with all of the additional paperwork that we're going to have to do."

Oliver started his business about 13 years ago, he said, and he makes a lot of the cast iron models and figurines in his basement. He faced a lot of uncertainty this year, he said, unsure of how and when trade rules would change, and whether or not his products were subject to tariffs.

The end of the de minimis exemption was the final straw, he said.

"I'm emotional, my energy is gone, I'm wiped out—It's been a stressful 8 months," he added. "There was always an end date. It just came sooner and not completely under my control. I figured I had another two or three years at minimum."

A lot of "mom and pop" businesses will likely face the same decision, he believes.

While he still needs to figure out what to do with all of the leftover inventory and equipment in his basement, he said, he's actually looking forward to his retirement. Despite the sadness of laying his business to rest, Oliver described the prospect of no longer dealing with cross-border trade as "a huge burden coming off."