Navigating Cross-Border E-commerce: Your Complete Guide to the Section 321 Revocation
On August 18, 2025, our premium reselling community, Arcane Society, sat down with Ali from YYZ Prep to discuss the revocation of the Section 321 De Minimis rules and its impact on cross-border e-commerce. You can watch the full video discussion here: Full Video Link.
The landscape of cross-border e-commerce between Canada and the United States has undergone a seismic shift. With the revocation of Section 321 De Minimis rules, sellers shipping from Canada to the US face new challenges—but also unexpected opportunities. This blog post distills the key takeaways from our comprehensive discussion, providing you with actionable insights to navigate these changes and adapt your business strategy accordingly.
What Changed and Why It Matters
Section 321 previously allowed shipments valued under $800 to enter the US duty-free without formal customs clearance. This made services like Stallion Express viable for Amazon FBA sellers. With this exemption gone, every shipment now requires proper customs processing, fundamentally changing how cross-border commerce operates.
The Immediate Impact
No more $800 duty-free threshold for Canadian shipments
Elimination of simplified shipping services that relied on Section 321
Mandatory customs declarations for all shipments regardless of value
New cost structures affecting profit margins
Your New Shipping Options: Informal vs. Formal Entry
With Section 321 gone, you now have two primary pathways for shipping to the US:
Informal Entry (Type 11) - For Smaller Shipments
Best for: Shipments valued up to $2,500 USD (based on your cost of goods)
Key Features:
Value based on your actual cost of goods, not retail prices
Limit of $2,500 per Amazon warehouse per day
Can use UPS or FedEx as your customs broker
Typical brokerage fees: $50-80 USD per shipment
Includes up to 3-5 HTS codes (additional codes cost extra)
Process:
Calculate your total cost of goods in USD
Obtain HTS codes for all products
Create commercial invoice with required information
Ship directly to Amazon warehouses using carrier brokerage
Pay duties and brokerage fees upon clearance
Formal Entry (Type 1) - For Larger Shipments
Best for: Higher-value shipments, typically sent via LTL or pallets
Key Features:
Requires a US-based customs broker
Must pay for bonds (single-use ~$75 or annual continuous bond)
More complex documentation requirements
Better for consolidating multiple shipments
Process:
Partner with a US customs broker
Submit detailed commercial invoices
Pay brokerage fees ($60-70 USD) plus bond fees
Coordinate with broker before shipment pickup
Handle any additional PGA (Partner Government Agency) requirements
Essential Documentation: Getting It Right
Success in the new system depends heavily on proper documentation. Here's what you need:
Commercial Invoice Requirements
Must Include:
Consignee: Amazon warehouse information
Importer: Your Canadian company (you're the "non-resident importer")
Shipper: Your company details
Product descriptions: Specific but not overly detailed
HTS codes: Accurate harmonized tariff codes
COGS values: In USD, excluding shipping costs
Manufacturer information: Factory name and address when possible
HTS Codes: Your Key to Accurate Duties
HTS (Harmonized Tariff Schedule) codes determine your duty rates. Here are critical tips:
Use AI tools for initial research, but validate with brokers
Compare duty rates for similar products—small differences can save significant money
Consider China-specific tariffs—many products face additional 20%+ duties
Factor in global tariffs that may apply on top of base rates
Example: A product with a base 3.5% duty rate from China might actually incur 30% total duties after China-specific and global tariffs are applied.
CUSMA/USMCA: Your Secret Weapon
Products manufactured in Canada, the US, or Mexico can qualify for zero duty rates under the CUSMA agreement. However, you must:
Provide proper certification (CUSMA certificate)
Include manufacturer information from North America
Attach certificates to at least one box per shipment
Maintain accurate records for potential audits
For many sellers, this makes North American-manufactured products significantly more competitive despite the new shipping complexities.
The Food Product Challenge
Shipping food items has become particularly complex:
For Formal Entries
Required: FDA Food Facility Registration Number from manufacturer
Need: Dun's number for your Canadian corporation
Process: Fill out FDA Product Data Sheet with broker
For Informal Entries
Minimum: FDA Prior Notice attached to shipment
Risk: May be asked for FSVP (Foreign Supplier Verification Program) documentation
Complication: Requires US agent if FSVP requested
Reality Check: Many sellers are finding food products challenging to ship profitably under the new system, especially without established supplier relationships.
Smart Solutions: Pattern Middle Mile
One innovative solution for Amazon sellers dealing with shipment splits is Pattern Middle Mile:
How It Works:
Send consolidated formal entry shipment to Pattern's facility
Pattern receives and sorts products by FBA box labels
Products automatically distributed to correct Amazon warehouses
Cost: Per cubic foot fee (typically less than placement fees)
Benefits:
Avoid multiple formal entries for shipment splits
Reduce overall shipping costs
Simplify logistics management
Maintain Amazon's shipment requirements
Cost Reality Check: What to Expect
Typical Cost Increases
Brokerage fees: $50-80 per informal entry, $60-70 plus bonds for formal
Duty rates: Often 20-30% for Chinese products after all tariffs
Processing time: Additional 1-3 days for customs clearance (expect longer delays at the start)
Documentation costs: Time and potential broker assistance fees
Margin Impact Analysis
Despite increased costs, many sellers report stable or even improved margins due to:
Reduced competition as casual sellers exit the market
Price increases across categories as costs are passed to consumers
Market consolidation benefiting persistent sellers
Opportunity in Chaos: Why This Could Help Your Business
While the changes present challenges, they also create significant opportunities:
Competitive Advantages
Barrier to entry eliminates casual competitors
Market consolidation increases margins for serious sellers
Premium positioning for those who master the new system
Supply chain optimization rewards efficient operators
Success Stories
Early adopters report:
Margin increases from 56% to 75% in some categories
Reduced competition on profitable products
Improved market positioning
More stable, predictable business models
eBay and Direct-to-Consumer Considerations
For eBay sellers and DTC businesses:
Key Adjustments
Update product listings to indicate manufacturing country
Include duty disclaimers in product descriptions
Consider DDP (Delivered Duty Paid) shipping options
Adjust pricing strategy to account for buyer duty costs
Focus on North American products where possible
Platform-Specific Tips
Check eBay's shipping preference settings
Consider removing automatic discount passing to customers
Explore US fulfillment options for high-volume products
Building Your Adaptation Strategy
Immediate Actions
Audit your product mix for manufacturing origins
Calculate new cost structures including duties and fees
Identify reliable customs brokers for your shipping volume
Update inventory planning for longer processing times
Revise pricing strategies to maintain margins
Medium-Term Optimization
Diversify product sourcing toward CUSMA countries
Establish US fulfillment relationships for key products
Develop expertise in customs documentation
Build relationships with reliable service providers
Monitor regulatory changes for potential reversals
Long-Term Positioning
Invest in compliance systems for scalable operations
Develop premium product lines that justify higher costs
Build brand recognition to reduce price sensitivity
Explore direct relationships with North American manufacturers
Consider US business establishment for major operations
Tools and Resources
Essential Platforms
HTS Code Research: AI tools combined with broker validation
Duty Calculators: Broker-provided tools for accurate estimates
Pattern Middle Mile: For Amazon shipment consolidation
Customs Brokers: Clear USA, Cole International, Carson International
Documentation Templates
Commercial invoice templates
CUSMA certification forms
FDA prior notice formats
Manufacturer information sheets
Tools/Software & Websites Referenced In Video
The Bottom Line: Adapt or Exit
The Section 321 revocation represents a fundamental shift in cross-border e-commerce. While it increases complexity and costs, it also creates opportunities for sellers willing to invest in proper systems and processes.
Success in this new environment requires:
Commitment to learning complex customs procedures
Investment in proper documentation and broker relationships
Strategic product selection favoring higher-margin items
Operational excellence in inventory and shipping management
Long-term thinking beyond immediate cost impacts
The sellers who thrive will be those who view these changes not as obstacles but as competitive moats. By mastering the new requirements while others retreat, you position yourself for sustainable success in a less crowded marketplace.
Key Takeaways
The changes are significant but not business-ending for prepared sellers
Documentation accuracy is crucial for smooth operations
North American products offer major competitive advantages
Consolidation services like Pattern Middle Mile provide cost efficiencies
Market opportunities are emerging as competition decreases
Professional relationships with brokers and service providers are essential
Long-term adaptation beats short-term panic responses
The cross-border e-commerce landscape has evolved, but opportunity remains abundant for sellers ready to evolve with it. The question isn't whether you can succeed in this new environment—it's whether you're willing to do what it takes to get there.
