U.S.Tariff Threats Prompt Shift in E-Commerce Landscape,Impacting Canadian Consumers & Businesses
Ottawa – Looming tariff increases proposed by former U.S. President Donald Trump are already reshaping the e-commerce strategies of businesses targeting North America, with potential consequences for Canadian consumers and the broader economy. Recent data indicates a surge in advertising spending in Canada by major international online retailers like Temu and Shein, while smaller, U.S.-based e-commerce ventures are reconsidering expansion into the Canadian market.
The Changing E-Commerce Terrain
The potential for increased tariffs – notably on goods originating from /china/” target=”_blank” rel=”noreferrer” title=”https://www.theglobeandmail.com/topics/china/”>China and other tariffed nations – is forcing businesses to reassess their supply chains and market focus. A key element of this shift centers around the “de minimis” threshold, which currently allows for duty-free import of goods under a certain value (currently $20 CAD) into Canada from the U.S. Suspension of this threshold, as proposed, would subject more U.S. imports to duties and increased scrutiny,impacting both businesses and consumers.
This change is particularly disruptive for small and medium-sized enterprises (SMEs) – many of which have flourished through platforms like instagram, TikTok, and Etsy. According to retail consultant Doug Jarvis, these businesses are questioning the viability of establishing a Canadian inventory presence when the vast majority of their sales originate in the U.S. The increased cost and complexity of navigating Canadian import regulations, coupled with potential tariffs, make expansion less attractive.
“They’re thinking, ‘Why would I want to open up another inventory position in the country of Canada, when 90 per cent of my volume is going to come from the US anyway?'” Jarvis explained. This reluctance to expand could lead to reduced product availability in Canada, limiting consumer access to niche and small-batch goods previously readily available online.
Larger Players Respond: A Focus on Diversification
While smaller businesses may retreat, larger companies like Temu and Shein appear to be capitalizing on the uncertainty. Data from Sensor Tower, a marketing-intelligence firm, reveals a notable increase in Canadian ad spending by these retailers following Trump’s tariff announcements: a 61% year-over-year jump for Temu and a 34% increase for Shein in the second quarter of 2025.
This suggests a strategic move to aggressively pursue market share outside of the U.S., anticipating potential barriers to trade. University of Ottawa professor Jonathan Calof notes that these companies will likely employ a variety of strategies to remain competitive, including price reductions, quality improvements, and product diversification. However, he cautions that smaller e-commerce businesses lack the financial adaptability to sustain prolonged price wars.
Impact on Canadian Consumers & Logistics
The suspension of the de minimis threshold will likely translate to increased costs and logistical challenges for Canadian consumers.Matthew Melvin, a spokesperson for Canadian shipping company Chit Chats, anticipates longer waiting times for U.S. imports due to heightened border scrutiny. Returning goods purchased from U.S. retailers could also become more intricate and expensive.
Beyond the direct impact on individual purchases, experts warn of broader macroeconomic consequences. Steve Bozicevic, CEO of A&A Customs Brokers, argues that reduced American demand for Canadian goods could lead to job losses and increased inflation within Canada. “It’s more the macroeconomic impact,” he stated.
Long-Term Implications & Context
The current situation highlights the interconnectedness of the North American economy and the vulnerability of Canadian businesses to U.S. trade policy.the de minimis threshold has been a point of contention for years, with Canadian retailers arguing it creates an uneven playing field. While the threshold’s suspension may address some of those concerns, it also introduces new challenges for consumers and smaller businesses reliant on cross-border e-commerce.
The ongoing evolution of global trade dynamics, coupled with the potential for further policy changes, underscores the need for Canadian businesses to diversify their markets and build resilient supply chains.
key Takeaways:
Tariff Threats Drive Change: Proposed U.S. tariffs are prompting a shift in e-commerce strategies.
De Minimis Impact: Suspension of the de minimis threshold will likely increase costs and scrutiny for U.S. imports.
SME Concerns: Smaller e-commerce businesses are reconsidering Canadian expansion.
Large Retailer Response: Temu and Shein are increasing Canadian ad spending, signaling a focus on diversification.
Consumer Impact: Canadians may face longer wait times, increased costs, and reduced product selection.
Macroeconomic Risks: Reduced U.S. demand could lead to job losses and inflation in Canada.