Canada may have escaped new tariffs — for now — under President Trump’s “Liberation Day” trade crackdown, but that didn’t spare Ottawa-based Shopify (SHOP) from a major selloff.
Shares of the e-commerce giant plunged 18.2% on Thursday after Bank of America analysts warned that e-commerce software vendors are among the “most exposed” to Trump’s escalating trade war.
While Canada avoided additional tariffs in this latest round, the 25% tariffs previously levied on Canadian and Mexican goods remain in place. Those duties are supposedly aimed at curbing migration and fentanyl trafficking.
Most goods under the USMCA free trade agreement will continue to be exempt, with the notable exception of auto exports and metals like steel and aluminum.
But Shopify’s vulnerability isn’t tied to domestic trade; it’s about the sellers on its platform.
Many Shopify merchants are based in countries hit hardest by the new tariffs: China (54%), Cambodia (49%), Vietnam (46%), Bangladesh (37%), Thailand (36%), and Taiwan (32%).
Trump also plans to eliminate the de minimis exemption for China and Hong Kong on May 2 — signaling that for Shopify the worst may still be yet to come.
That provision allows packages under $800 to enter the U.S. with minimal customs requirements, making cross-border e-commerce faster and cheaper for small sellers.
In a February blog post, Shopify defended the rule, calling de minimis protections “crucial for small businesses in international trade.”
“They exempt low-value shipments from taxes and duties, keeping costs low and improving competitiveness worldwide,” the company wrote. “And for many, these provisions are critical to survival.”
Shopify warned that removing these protections would punish legitimate entrepreneurs and “hike costs, disrupt supply chains, and hinder cross-border trade.”
Instead of raising trade barriers, the company argued for streamlining customs and improving digital duty collection to promote global competitiveness.
Political fallout in Canada
Shopify is Canada’s second-largest publicly traded company, making it a flashpoint in the country’s response to Trump’s trade actions.
After Trump’s press conference on Wednesday, Canadian Prime Minister Mark Carney promised retaliation: “We are going to fight these tariffs with countermeasures, we are going to protect our workers, and we are going to build the strongest economy in the G7.”
But Shopify’s CEO, Tobi Lütke, had a more nuanced take.
When former Prime Minister Justin Trudeau threatened reciprocal tariffs in February, Lütke posted on X that while he was “disappointed” in Trump’s move, he also opposed hitting back.
“Trump believes that Canada has not held its side of the bargain, and he set terms to prove that we still work together: get the borders under control and crack down on fentanyl dens,” he wrote.
“These are things that every Canadian wants its government to do, too. These are not crazy demands, even if they came from an unpopular source.”
He added, “Hitting back will not lead to anything good. America will shrug it off. Canada will decline.”
Shopify shares are now down 22.7% year to date. The company moved its U.S. listing from the NYSE to Nasdaq last month.
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