How to Calculate Duties Without the De Minimis Threshold: A Guide for SMB Exporters

The elimination of the U.S. de minimis threshold is set to reshape cross-border trade between Canada and the United States. For small and medium-sized exporters (SMBs), this means that even low-value shipments will now be subject to duty assessment and customs clearance.

If you’ve been relying on the de minimis exemption to ship goods under $800 into the U.S. duty-free, the change will bring new complexity to pricing, compliance, and customer expectations. The good news? With the right tools and processes, calculating duties doesn’t have to be overwhelming.

Why the End of De Minimis Matters for SMB Exporters

Under the old rules, many Canadian SMBs avoided duty payments on smaller orders thanks to the de minimis threshold. Now, every shipment must be assessed for duties and taxes. This directly impacts:

• Product Pricing – duties increase landed costs, which may need to be passed on to U.S. buyers.
  
  
• Profit Margins – absorbing duties without adjusting pricing could erode profitability.
  
  
• Compliance Burden – CBP requires complete documentation for all shipments, regardless of value.
  
  

For a deeper dive into the policy shift, see our article: Selling to U.S. Customers? How the End of the De Minimis Threshold Will Change Cross-Border Trade.

Step 1: Determine the HS Code for Your Product

Every product shipped into the U.S. is classified under the Harmonized System (HS) code.

• HS codes determine the tariff rate applied to your product.
  
  
• Incorrect classification can lead to overpayment or penalties.
  
  
• Use the CBP Harmonized Tariff Schedule or work with a customs broker to confirm accuracy.
  
  

Example: Apparel vs. jewelry vs. electronics — each category carries very different duty rates.

Step 2: Establish the Customs Value

CBP duties are calculated based on the transaction value of the goods, which includes:

• The price paid by the U.S. buyer.
  
  
• Packaging costs.
  
  
• Assists (e.g., tooling or design provided by the buyer).
  
  
• Shipping and insurance in some cases.
  
  

Tip: Always ensure commercial invoices reflect the correct declared value.

Step 3: Apply the Correct Tariff Rate

Once you have the HS code and customs value, apply the tariff rate from the U.S. Harmonized Tariff Schedule (HTSUS).

• Rates vary by product category and country of origin.
  
  
• Some Canadian goods may qualify for USMCA preferential treatment (duty-free), but only with proper Certificates of Origin.
  
  

Example Calculation:

• Customs Value: $1,000
  
  
• Tariff Rate: 5%
  
  
• Duty Owed: $50
  
  

Step 4: Check for USMCA Eligibility

If your product qualifies under USMCA rules of origin, duties may be waived even without de minimis.

• Provide a USMCA Certificate of Origin with the shipment.
  
  
• Ensure supplier declarations and HS codes align with CBP requirements.
  
  

Failing to provide origin documentation means duties will be charged, even if the goods qualify.

Step 5: Factor in Additional Fees

In addition to duties, SMBs may face:

• Merchandise Processing Fee (MPF): applied to most imports.
  
  
• Harbor Maintenance Fee (HMF): for ocean shipments.
  
  
• Excise Taxes: on certain goods like alcohol or tobacco.
  
  

These charges should be included when calculating landed costs for U.S. buyers.

Step 6: Use Digital Tools to Simplify Duty Calculations

Manually calculating duties for each shipment can be error-prone and time-consuming. Modern digital customs platforms (like Clearit Canada’s) allow exporters to:

• Automate HS code classification.
  
  
• Instantly calculate duties and taxes.
  
  
• Generate compliant invoices and certificates.
  
  
• Provide U.S. buyers with transparent landed cost estimates.

Common Mistakes to Avoid

• Misclassifying products with the wrong HS code.
  
  
• Forgetting to include packaging or assists in customs value.
  
  
• Assuming USMCA applies without proper certificates.
  
  
• Not updating product records when tariff schedules change.
  
  

Final Thoughts

The removal of the de minimis threshold adds complexity for Canadian SMB exporters, but it doesn’t have to stop growth in the U.S. market. By mastering duty calculations, leveraging digital customs solutions, and ensuring accurate documentation, exporters can stay compliant while protecting profit margins.