Sellers in other countries struggle to maintain US customers as holiday shopping season starts

U.S. tariff change strikes blow to small international sellers as holiday season approaches

Small businesses across the globe are reeling from the impact of a recent U.S. policy change that eliminated the “de minimis” import tax exemption for packages valued under $800. The Trump administration’s decision, which took effect August 29, has dramatically altered the economics of cross-border e-commerce, catching many sellers and consumers off guard.

At Fleece & Harmony, a woolen mill and yarn shop in Prince Edward Island, Canada, owner Kim Doherty has watched U.S. sales plummet to just 10% of previous levels. What was once a straightforward transaction now comes with significant additional costs. A $21 ball of yarn now incurs $12 to $15 in UPS brokerage fees, plus state taxes and a 6.5% tariff, nearly doubling the price for American customers.

“We had orders that have reached the customers and they’re in shock,” Doherty said. “It’s amazing how many people really didn’t know what the impact was going to be.”

The policy shift was ostensibly designed to curb drug trafficking and prevent low-quality goods from discount retailers like Temu and Shein from flooding the U.S. market. However, as the critical holiday shopping season begins, the collateral damage to legitimate small businesses and consumers has become increasingly apparent.

Chad Lundquist from Fort Lauderdale, Florida, experienced this firsthand when he ordered $27 worth of fragrance oil from a Toronto-based company, only to be hit with a $10.80 tariff bill from FedEx upon delivery. “It wasn’t worth the $10 tariff for a $27 purchase,” Lundquist said, exemplifying the new consumer hesitation.

The impact extends beyond North America. Martha Keith, founder of British stationery brand Martha Brook, has seen a dramatic reversal in her U.S. business trajectory. After enjoying a 50% year-over-year increase in U.S. sales through her Etsy store, numbers dropped sharply when the exemption ended—even though she’s absorbing the import taxes and customs fees herself rather than passing them to customers.

“The issue seems to be in customer confidence hitting the desire to order from businesses outside of the U.S., because of confusion about how the tariffs will affect them,” Keith explained. The timing has proven particularly costly for her business, which had already sold about 344 stationery advent calendars to U.S. customers before the tariffs hit. Covering the unexpected shipping and tariff costs for these pre-sold items has cost her company an additional £5,750 ($7,590).

For Sue Bacarro, co-owner of Digi Wildflowers in Windsor, Ontario, which sells embroidered baby blankets and custom quilts, the timing couldn’t have been worse. The business had just placed a large inventory order in preparation for the holiday season when the exemption was eliminated.

“Inventory wasn’t moving as expected, and we suspected customers were hesitant to purchase due to potential duty charges,” Bacarro said. Sales—70% of which typically come from American customers—only began to rebound when the company prominently added a banner on its site stating, “U.S. Import Duties On Us.”

Not all businesses can afford this approach. Doherty from Fleece & Harmony doesn’t plan to pay the tariffs and fees for her customers. “I’m not in a position as a small business owner to do that. The profit margins are already rather thin,” she said, adding that “on principle,” she shouldn’t have to do it. Instead, she’s focusing on expanding her Canadian customer base through her brick-and-mortar store and fiber festivals.

The situation has been further complicated by international postal services temporarily halting U.S. deliveries due to confusion around the new requirements. Selene Pierangelini’s spiritual wellness product business, Apricot Rain Creations in Brisbane, Australia, saw Australia Post suspend service to the U.S. for about a month, resuming only on September 22.

With over 75% of her customer base in the U.S., Pierangelini temporarily switched to more expensive private carriers like FedEx and UPS. Since service resumed, Australia Post has partnered with cross-border shipping technology provider Zonos to offer a shipping calculator that allows sellers to prepay duties and fees, though this adds yet another layer of costs.

Despite increasing her shipping prices to help cover the 10% tariff rate applied to her Australian goods, Pierangelini’s U.S. sales have dropped from 85% to just 35% of her total business. She remains hopeful that consumers are simply waiting for Black Friday and Cyber Monday sales, but has already begun diversifying her market approach by restarting European sales and exploring U.S.-based production options.

“This situation highlights how fragile small businesses can be when dependent on one market,” Pierangelini reflected. “While it has been a shock, it’s also pushed me to diversify—something that will hopefully make my business stronger and more resilient in the long run.”

As the holiday shopping season progresses, the full impact of this policy change on cross-border commerce remains to be seen, but the early indicators suggest a significant reshaping of the international e-commerce landscape, particularly for small businesses that have relied on American consumers.