Section 321 Eliminated: What US E-Commerce Brands Must Know (2026)

On August 29, 2025, the United States eliminated the Section 321 de minimis exemption for all commercial imports, ending a decades-old program that had allowed shipments valued under $800 to enter the US duty- and tax-free with minimal paperwork. Executive Order 14324, published in the Federal Register at 90 FR 36971, directed US Customs and Border Protection (CBP) to terminate the de minimis pathway effective that date. (CBP guidance, White House EO 14324)

For US ecommerce brands, and specifically those serving Canadian customers, the implications are misunderstood. This post clarifies what actually changed, what did not, and what the correct 2026 strategy looks like.

The critical frame: Section 321 is US law governing imports into the US. It never applied to Canada-bound parcels. But its elimination has cascading effects on US DTC supply chains -- and combined with the March 2025 reciprocal tariffs, it has made cross-border ecommerce into Canada materially more expensive.

What Section 321 Was

Section 321 of the Tariff Act of 1930 (19 U.S.C. 1321) authorized the Secretary of the Treasury to exempt shipments of "fair retail value in the country of shipment" below a statutory threshold from formal entry and duty collection. That threshold was raised to $800 in 2016 by the Trade Facilitation and Trade Enforcement Act (TFTEA).

Between 2016 and August 2025, Section 321 enabled:

• Over 1.3 billion de minimis shipments in fiscal year 2024 (CBP statistics)
• A drop-ship model where US sellers imported individual parcels directly from Asian suppliers (often via Hong Kong, China, and Vietnam) into US consumers' hands, duty-free
• Companies like Shein and Temu to build $50B+ GMV businesses substantially on de minimis flows

What Changed on August 29, 2025

Executive Order 14324 (signed July 30, 2025; effective August 29, 2025) eliminated the de minimis exemption for all commercial shipments, regardless of country of origin. (Federal Register 90 FR 36971)

Effective August 29, 2025:

1. Every commercial parcel entering the US requires a formal or informal entry
2. Duties apply from the first dollar of declared value
3. The simplified Entry Type 86 pathway no longer provides de minimis relief for commercial imports
4. CBP estimates the regulatory change will add $15-$35 per parcel in brokerage and duty costs on average (PwC US 2025 de minimis analysis)

What Did NOT Change

This is where most secondary coverage has been sloppy. Three things that did not change:

1. Canadian de minimis thresholds

Canada operates under the Courier Low Value Shipment (CLVS) program, governed by CBSA Memorandum D17-4-0. The Canadian thresholds are:

• C$20 for GST/HST and duties
• C$40 for duty specifically on shipments from the US and Mexico (raised under CUSMA from the prior C$20)

These thresholds are unchanged in 2026. (CBSA Memorandum D17-4-0)

2. Cross-border shipping from the US to Canada

Section 321 is US law. It governs imports into the US. A parcel leaving a US warehouse bound for a Canadian customer never touched Section 321 in the first place -- that shipment is governed by Canadian import rules.

So if you see a blog post saying "Section 321 elimination means US brands can't ship to Canada" -- that's wrong. The chain of causation is more indirect and more interesting.

3. CUSMA tariff preference

The Canada-United States-Mexico Agreement remains in force. Qualifying US-origin goods still receive preferential (often zero) duty treatment entering Canada when a valid Certification of Origin is provided. (Global Affairs Canada CUSMA)

What Actually Changed for US Brands Serving Canada

Three indirect but material effects:

Effect 1: The drop-ship-from-Asia-via-US model is broken

Many US DTC brands used a model that went: Asian supplier → de minimis parcels into the US → regional 3PL → forward to end customer (US or Canadian).

The August 29, 2025 elimination added $15-$35/parcel in duty and entry fees to the first leg of that chain. Unit economics collapsed for low-AOV brands.

Sellers who had been using US warehouses to serve Canadian customers with consolidated, dropped-out-of-Asia inventory now face structural cost increases on the inbound side.

Effect 2: Reciprocal US-Canada tariffs (March 2025)

On March 4, 2025, the US imposed a 25% tariff on a broad category of Canadian imports; Canada responded with 25% countermeasures on roughly C$30 billion of US goods (Department of Finance Canada notice of countermeasures).

For US brands shipping into Canada, this means:

• Non-CUSMA-qualifying goods now face 25%+ duty plus the historical Most-Favoured-Nation rate in several HS chapters
• CUSMA qualification is no longer a nice-to-have -- it is the difference between a viable Canadian channel and a dead one
• The compliance burden (certificates of origin, rules of origin tracing, HS classification accuracy) has become non-negotiable

Effect 3: Per-parcel brokerage is now always in the calculation

Even before August 2025, Canadian imports required a CBSA entry. Small parcels benefited from the Courier Low Value Shipment program's streamlined clearance, but commercial brokerage fees ($15-$25 per parcel at UPS, FedEx, DHL rates) still applied to anything outside the CLVS threshold.

Combined with surprise GST/HST at the door for Canadian consumers, the all-in friction per parcel is now $15-$25 higher than the nominal shipping rate -- on every single order.

The Real Remedy: NRI + Canadian 3PL

The model that solves all three of the above problems is well-established and unchanged by 2025 developments: the Non-Resident Importer (NRI) program paired with a Canadian 3PL.

How it works

1. Your US company registers as the importer of record in Canada under the NRI program -- no Canadian legal entity required
2. Obtain a Canadian Business Number (BN9) from CRA and add an RM import/export program account
3. Register on the CARM Client Portal (mandatory since October 2024)
4. Appoint a Canadian licensed customs broker
5. Ship one bulk shipment to a Canadian 3PL
6. Customs clears once on the pallet, CUSMA preference claimed, GST/HST paid on customs value
7. Domestic fulfillment at Canadian postal rates, 1-3 day delivery

Why this is the 2026 playbook

• One customs event instead of 500. Brokerage amortizes across all orders.
• CUSMA preference claimed at one entry instead of 500. Paperwork is predictable.
• GST/HST collected at checkout under the simplified GST/HST regime for non-residents (threshold: C$30K annual Canadian sales)
• No surprise fees at the Canadian customer's door. Cart abandonment drops measurably.
• 1-3 day delivery to Ontario/Quebec vs 5-14 days cross-border.

Compliance Checklist for 2026

Use this checklist before your first Canadian inbound shipment:

Corporate and Tax Registration

• Canadian Business Number (BN9) registered with CRA
• RM (import/export) program account added to BN9
• RT (GST/HST) program account added if annual Canadian sales will exceed C$30K
• Simplified GST/HST registration filed if selling digital or low-value goods direct to Canadian consumers

Customs

• CARM Client Portal registration completed and Business Account Manager assigned
• Licensed Canadian customs broker selected and General Agency Agreement signed
• Release Prior to Payment (RPP) security bond posted in CARM (mandatory since October 2024 -- broker's bond no longer covers your account)
• HS classifications finalized for every SKU (10-digit Canadian codes)

Product Compliance

• Country of origin documented for each SKU
• CUSMA Certification of Origin prepared for qualifying goods (valid for 12 months)
• Bilingual labeling compliant with the Canadian Consumer Packaging and Labelling Act and applicable CFIA / Health Canada requirements (French and English, metric units for pre-packaged consumer goods)
• Health Canada cosmetic notifications filed for cosmetics (Cosmetic Notification Form under the Cosmetic Regulations)
• CFIA import declarations filed for food, plants, and animal products
• Natural Health Products Directorate (NHPD) Product Licence for NHPs

Operational

• Canadian 3PL partner onboarded with WMS integration to your storefront (Shopify, Amazon.ca FBM, WooCommerce)
• Return flow defined -- returns route to the Canadian 3PL, never recross the border
• Carrier accounts set up -- Canpar, Canada Post, Purolator, or consolidators like Chit Chats

The Cost of Getting It Wrong

CBSA enforces aggressively in 2026. Common penalties seen in the wild:

• Administrative Monetary Penalty (AMP) C$150-$25,000 per instance for misdeclared value or HS code
• Detained shipments held 5-30 days pending reclassification or origin verification
• CUSMA preference denial retroactively, with duty plus interest owed on past 4 years of entries
• Importer of record liability -- as the NRI, your US company is on the hook. This is not delegated to the broker.

These are avoidable. The fix is to work with a broker and a 3PL that run this lane every day.

Expert Takeaway

In 2026, the winning Canadian strategy for US DTC brands is no longer ad hoc. It is a regulated, repeatable operational flow: register NRI, claim CUSMA, clear once, fulfill domestically, collect GST/HST simply, route returns locally. Brands that treat Canada as an afterthought shipping channel bleed money. Brands that treat it as a distinct distribution arm with proper fulfillment infrastructure capture the 62% of Canadian consumers who shop cross-border -- without the friction that has traditionally made that shopping experience miserable.

Next Step

HELVIA is a 2,700 sq ft 3PL in Barrie, Ontario, purpose-built for US DTC brands running the NRI model at 50-500 orders/month. We coordinate customs clearance, CUSMA claims, and Canadian-domestic fulfillment as a single onboarding flow. Typical time from contract to first Canadian order shipped: 7 business days.

If you want to model what NRI + 3PL would look like for your brand, request a quote, review the US brands onboarding flow, or see the full cross-border fulfillment breakdown.

Citations: CBP Section 321 guidance (cbp.gov); Federal Register EO 14324 (90 FR 36971); PwC 2025 de minimis analysis (pwc.com); CBSA CARM Client Portal (cbsa-asfc.gc.ca/carm); CBSA Memorandum D17-4-0 (CLVS program); Department of Finance Canada, Notice of Ways and Means Motion to impose 25% tariffs (March 4, 2025); Global Affairs Canada CUSMA resources; CRA simplified GST/HST for non-residents (canada.ca/gst-hst).