A latin term that means “about minimal things” is - ironically - taking on a huge significance for Canada in the re-negotiation of NAFTA. The de minimis level -also referred to as the low value threshold - refers to the value below which duty and taxes are not charged.
Currently, most items valued under $800 US can be imported duty free to the USA. Under the new USA Canada Free Trade agreement (USMCA) imports to Canada valued over $40 CAD are subject to duty and taxes. Express shipments valued under $150 CAD can be imported duty free (but are subject to sales tax).
Section 321 to the USA versus LVS system clearance in Canada: Serving express e-commerce imports but with much different low value thresholds.
Jet Worldwide helps businesses develop high volume duty free import processes to Canada and the USA
To develop duty free express parcel import processes to Canada and the USA
Contact our team: firstname.lastname@example.org
The pending increase in Canada’s de minimis threshold (from $20 to $40) will be the first increase since 1985. The $150 threshold allows cross border express parcels to be imported to Canada duty free but not tax free.
Customs de minimis policy in Canada was established as a way to ensure that the government does not spend more than it collects in duties. But it has since evolved into a critical issue for “free trade for e-commerce shipments" around the world. Domestic retailers around the world - including Canada - have rallied political support to protect their home market from what they view as unfair competition.
Canadian Retailers fought hard against raising the de minimis value and - at least according to their public statements - are in happy that with new USMCA de minimis levels. The final USMCA level of $40 / $150 are much lower than what American negotiators has initially demanded.
USA: Most open market for e-commerce parcels. Canada: More open for low cost goods sent via express.
De minimis values across the world. Despite the trade rhetoric of the US President, the USA continues to lead the world when it comes to access of cross border e-commerce parcel imports.
Notes on new North American Free trade de-minimis levels
- The USA de minimis value in the USA officially applies to duty but there is no current mechanism by US customs for collecting sales tax on behalf of states and local municipalities.
- The Canadian duty free/ tax free Canadian de minimis is $40. The duty free only threshold is $150.
- The Mexican de minimis threshold of $100 USD is both duty free and tax free.
At Jet Worldwide, we believe the new Canadian de minimis to be a great opportunity for USA companies selling to Canada using our low cost express shipment delivery from the USA to Canada.