DavidsTea has established a U. S.
fulfillment operation in Chicago to tackle trade disruptions and improve its cross-border logistics.
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The Canada-based tea retailer made the move in response to the termination of the de minimis exemption, which previously allowed duty-free entry for low-value shipments.
The exemption ended in August 2025, leading to higher costs and unpredictable delivery times for orders shipped from Canada to the United States.
To resolve these bottlenecks, DavidsTea partnered with a third-party logistics provider to set up the Chicago facility.
Strategic Expansion for Long-Term Growth
The Chicago fulfillment center began processing U. S.
e-commerce orders in late March 2026.
CEO Sarah Segal explained during an April earnings call that the base is not just a temporary fix but a foundation for sustained commercial growth in the U.
S.
“This fulfillment platform in Chicago, which complements our warehouse and logistics operations in Montreal, brings inventory closer to U.
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S.
customers, supports improved service levels and strengthens the company's ability to grow profitably south of the border,” Segal said.
The facility operates with a carefully selected range of SKUs, allowing the company to ship parcels at a significantly reduced cost.
This targeted approach aims to enhance customer experience and drive a recovery in U. S.
sales.
Impact of Trade Friction on Sales
The bilateral trade conflict between the U. S.
and Canada has heavily pressured cross-border shipping volumes over the past year. This operational friction led to a noticeable decline in overall sales performance.
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In 2025, DavidsTea's e-commerce sales fell by 7.6%, driven primarily by an 18.4% plunge in U.
S. turnover.
The company expects that improved customer service will help reverse this trend.
Segal said she expects U. S.
sales to gradually recover in the second half of fiscal 2026. The Chicago base is central to this turnaround strategy.
The now-defunct de minimis exemption previously allowed international shipments valued under $800 to enter the U. S.
duty-free. E-commerce platforms like Shein and Temu, along with DavidsTea, relied on this rule for cost-effective cross-border operations.
With the new fulfillment center, DavidsTea aims to mitigate trade headwinds and build a more resilient supply chain for its U.
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S. customers.
