Good morning. Canadian e-commerce giant Shopify Inc. is facing fresh pressure from U.S. tariffs and a looming end to duty exemptions on low‑cost imports. That’s in focus as the company reports second-quarter earnings this morning – along with a look at why we’re putting a cork in California wine.
Up first
In the news
Lumber: Prime Minister Mark Carney said the federal government will provide $1.2-billion in financial supports to help Canada’s softwood lumber producers deal with U.S. trade duties.
Trade: Aluminum and steel products incurred nearly two-thirds of all U.S. taxes on imports from Canada in June, reflecting the concentrated pain being inflicted on a handful of industries by President Donald Trump’s tariff onslaught.
Pharmaceuticals: Some patients who take popular weight-loss drug Wegovy are having their prescriptions redirected to pharmacies that have signed exclusive deals with their group benefit insurers – the most high-profile example yet of a controversial industry practice called preferred pharmacy networks.
Travel: Air Canada flight attendants have voted in favour of strike action if necessary, their union said last night, in a move that could allow them to walk off the job as early as this month.
On our radar
Earnings include Shopify and Manulife Financial Corp., which reports after markets close.
Remember these boards? I wonder where they are now.Carlos Barria/Reuters
In focus
What Shopify’s outlook can show us
Zooming in: Rising consumer costs, new fees and continued trade frictions are adding to a growing number of challenges that e-commerce giant Shopify Inc. would like to cross off its list.
Last quarter, the Ottawa‑based e‑commerce company told investors it could withstand U.S. tariffs on low‑value Chinese imports. At the time, Washington’s suspension of the de minimis exemption – which allows goods under US$800 to enter tariff‑free – applied only to China.
But last week, U.S. President Donald Trump expanded that suspension to every other country in the world. That adds pressure on smaller merchants, consumers and retailers, who were already facing higher costs from universal tariffs.
In Canada, whose exporters are most exposed to the U.S. market, many small merchants on e-commerce platforms are going to have a tougher time staying in business past August.
On top of the de minimis change and the tariffs, Canadian vendors are contending with increased competition from Temu and Shein – large Chinese companies that already lost their exemptions on smaller shipments to the U.S. and have launched an aggressive pursuit of new markets in recent months.
- Temu’s ad spend in Canada jumped 61 per cent year-over-year in the second quarter of 2025 after Trump’s tariff threats, Mariya Postelnyak reports. Shein’s spending rose 34 per cent, according to data provided to The Globe by marketing-intelligence firm Sensor Tower.
Shopify’s fortunes rise and fall largely with those of its merchants, earning subscription and transaction fees on the goods they sell. The smallest of those sellers now face a two‑front challenge: higher duties on shipments to the U.S., and the prospect of weaker consumer demand as Americans absorb higher costs.
Zooming out: That potential slowdown is now the larger threat to Canada’s economy, said Nathan Janzen, assistant chief economist at RBC.
Before April’s so‑called “Liberation Day,” much of the concern was that Canada would bear the brunt of U.S. tariff increases, “so the Canadian economy would soften while the U.S. economy did fine.”
Since then, Janzen told me yesterday, the bigger risk has been a slowdown in U.S. growth – especially in the industrial sector – even though tariffs still don’t apply to most Canadian exports.
RBC expects U.S. unemployment to reach 4.5 per cent by year‑end as tariffs take hold, inflation edges higher and consumer spending eases.
The effects of tariffs and the fall of the de minimis exemption might be muted in the U.S. – for now. But businesses have been selling out of pre-tariff imports and cutting into profit margins. Rising prices across an array of consumer goods from coffee to clothing apparel, meanwhile, were already pulling U.S. inflation higher in June.
“What we’ve seen to date in the U.S. economy in terms of limited inflation impact, and some softening in labour markets in trade-sensitive sectors like manufacturing, is really the leading edge of the knife,” Janzen said.
Bonus: De what?
- “De minimis” is derived from the legal maxim “de minimis non curat lex” – latin for “the law does not concern itself with trifles.”
- For merchants relying on cross‑border e‑commerce, the new rules are anything but trivial. Many lack the scale to absorb the added duties, reconfigure supply chains on short notice or shift their customer base toward other countries.
- Trump’s decision to suspend the rule means imports valued at or under US$800 soon will no longer be exempt from tariffs and instead be subject to the blanket fees the U.S. has imposed on trading partners.
Charted
Put a cork in it
American wine has nearly stopped flowing into Canada because of widespread import bans on alcoholic drinks produced in the United States, part of a showy but forceful protest of the Trump administration’s tariff policies.
Canada imported just $2.9-million of American wine in April – a decline of 94 per cent from a monthly average of $49.2-million last year, according to recently published Statistics Canada figures.
Bookmarked
On our reading list
Saving up: HOOPP’s new CEO says the investing world is changing, and portfolios have to adapt.
Moving away: They ditched Canada’s big cities for a cheaper lifestyle. How did it work out? (Podcast)
Taking a chance: Canada’s risk-averse businesses are "slouching toward AI."
Morning update
Global markets edged higher as investors assessed weak U.S. economic data and corporate warnings about the hit from tariffs amid growing Federal Reserve rate cut expectations.
Wall Street futures were in positive territory after U.S. markets closed lower yesterday. TSX futures followed sentiment higher after Canada’s main stock index closed at a fresh record high yesterday.
Overseas, the pan-European STOXX 600 was up 0.07 per cent in morning trading. Britain’s FTSE 100 rose 0.25 per cent, Germany’s DAX gained 0.11 per cent and France’s CAC 40 advanced 0.3 per cent.
In Asia, Japan’s Nikkei closed 0.6 per cent higher, while Hong Kong’s Hang Seng inched up 0.03 per cent.
The Canadian dollar traded at 72.70 U.S. cents.