UK firms are warning that new taxes on sending low-value parcels to the US are bringing uncertainty and potential price hikes for their businesses. US President Donald Trump cutting the “de minimis” exemption means parcels valued under $800 (£592) will be subject to tax. The Federation of Small Businesses has warned this will push up costs and create new barriers for small firms in the UK trying to compete with bigger brands.
Helen Hickman, who has a hand-dyed wool company, has stopped shipping wool to the US due to uncertainty about the costs. She says “I knew it was going to be an absolute chaotic mess” and “I didn’t have enough information to be able to comfortably say that I could ship as normal”.
The changes mean packages valued at under $800 will face the same tariff rate as other goods from their country of origin – for the UK that’s 10%. Previously, the de minimis exemption meant goods valued at $800 or less could enter the US without paying any border taxes.
US consumers used the exemption to buy cheap clothes and household items from online commerce sites like Shein and Temu, as well as from countries other than China. But from now, “a typical $100 order could now incur an additional $30 to $50 in costs, depending on the final sales tax rate adopted by US authorities,” says Martin Hamilton, partner and head of retail at accountancy firm Menzies.
Julian Boaitey, who started his African skincare brand Yendy Skin in 2021, says the US market had grown for his company with 20% of sales coming from across the Atlantic. He had planned to make the American market 80% of his business but says he is now exploring whether to manufacture a small range in the US or export larger volumes there and ship directly to consumers from the US.
Tina McKenzie, policy chair of the Federation of Small Businesses, says: “Small firms in the UK have already been hit by US tariffs, with just over two in ten saying they have stopped, or may stop, exporting there altogether.” She added: “The US Administration’s decision to scrap the de minimis threshold, combined with postal carriers temporarily suspending deliveries in response, will push up costs and create new barriers.”
Statistics published by HMRC show that in 2023 around 28,000 small businesses – companies with less than 49 employees – exported goods to the US. Sophie Arnold runs a small jewellery business and stopped shipping to the US when she heard the $800 exemption was ending. She says it will have a negative impact on her business and “I might have to look at returning into an office or doing other jobs and not running my business full time”.
The FSB says it wants the UK government to provide more support. Ms McKenzie says raising the Trading Allowance – a tax-free allowance for casual income – from £1,000 to £3,000 would “make it easier for people to sell more, helping them cope with the extra costs that tariffs will bring in”. The UK government announced it was reviewing its own de minimis rules in April. Low-value imports, which are worth £135 or less, are currently exempt from customs duties.
Source link
