Tariff loophole ends; Ssense becomes first casualty as bankruptcy protection is granted

A U.S. policy change that ended the de minimis exemption for low-value shipments has claimed its first major victim in the fashion sector: Ssense, the Montreal-based luxury retailer that curates designer brands and high-end streetwear. On Friday, Ssense won court authorization to move forward with bankruptcy protection under Canadian law, a move the company said will help it reorganize its finances and pursue a potential sale. Ssense once commanded a valuation around C$5 billion and presented a broad roster of labels such as Acne Studios, Givenchy and Saint Laurent. The company owes about $144 million to banks and other lenders, and its founders, including chief executive officer Rami Atallah, have signaled an interest in buying the business themselves if a deeper restructuring or sale proves viable. The court’s approval allows Ssense to continue operating while it charts a plan to address its debts and preserve the business long-term. The Montreal flagship and its accompanying distribution facilities remain central to Ssense’s operations as it negotiates a path forward.

The ending of the de minimis exemption—previously allowing imports valued at $800 or less to clear customs without duties or taxes—has broad implications beyond Ssense. The rule change, which came after President Donald Trump signed executive orders aimed at tightening duties on low-cost goods, is expected to raise costs for retailers and shoppers alike and increase compliance burdens on companies and U.S. Customs and Border Protection. The de minimis exemption had been a lifeline for fast-fashion players such as Shein and Temu, enabling their ultra-cheap offerings to undercut rivals by avoiding duties on low-value parcels. Analysts warned that price increases could follow, with some items potentially rising 20% or more, particularly among the lowest-priced products that benefited most from the exemption. Observers even noted visible price adjustments on retailer sites as evidence of the shift; for example, a bathing suit that cost $4.39 one day appeared at $8.39 the next on Shein, and a set of patio chairs on Temu rose from $61.72 to $70.17.

Before the exemption ended, Ssense’s business was heavily weighted toward U.S. customers—roughly 60% of its base. Its average order hovered around $534, a level well below the de minimis threshold, underscoring the sensitivity of the company’s margins to tariff policy. Since the rule’s expiration, Ssense has reported a shift, with U.S. buyers accounting for about 40% of sales, a change that underscores how tariff policy can realign consumer demand and logistics strategies across borders. The company operates a single five-story flagship store in Montreal that showcases a “building within a building” experience, with designer displays, fitting rooms, a reading room and a café; its products are mostly shipped from Montreal distribution facilities.

The Ssense case is not isolated in Canada. Even comparatively healthier brands have flagged potential headwinds from the end of de minimis. Lululemon Athletica said in its second-quarter earnings report that Trump’s tariffs would have a “significant adverse effect” on its business because most U.S. orders are fulfilled from Canada-based distribution centers. The company noted it is negotiating with vendors and raising prices, but executives warned the actions might not fully offset the tariff impact. Etsy, another major online marketplace, said in late July that the end of de minimis could constrain its ability to expand its global footprint, reflecting how the policy shift could influence platform growth and cross-border trade.

Jonathan Gold, vice president of supply chain and customs policy at the National Retail Federation, told The Wall Street Journal that the elimination of de minimis will inevitably lead to higher costs for retailers and consumers and create additional compliance burdens for U.S. Customs and Border Protection. As Ssense begins its court-supervised restructuring and looks for potential buyers or refinancers, industry observers will be watching how other Canadian brands and international sellers adapt to a higher-cost, more tightly regulated cross-border shopping environment.

Ssense’s lenders and backing banks, including Bank of Montreal and JPMorgan Chase, helped the company apply for protection under Canadian insolvency law, allowing it to reorganize while continuing operations. The founders have indicated a willingness to take part in any purchase of the company if a successful sale materializes, suggesting that the outcome will hinge on whether the business can stabilize finances, restore profitability and attract future investment. With the de minimis change now in place, other fashion retailers and online marketplaces are recalibrating their pricing, sourcing and distribution processes to navigate a more costly and complex import landscape. The coming months will likely reveal how many brands ultimately withstand the rebalancing of tariffs, consumer demand, and global supply chains.