Chancellor Rachel Reeves is reviewing a customs easement for low value imports whereby goods valued under £135 can be imported without customs duties needing to be paid.
The move to address this scheme comes amid fears that Donald Trump’s trade war with China could see cheaper goods dumped onto the UK market.
The government also announced “immediate action by the Trade Remedies Authority (TRA)” that will lead to “increased support for businesses to report unfair practices, improved monitoring of trade data, and an acceleration of potential measures to deter import surges”.
The measures follows warnings to the government from major retailers such as Next, Currys and Sainsburys.
Re-alignment
The move would align the UK with the US and EU, which are also looking to reform their similar ‘de minimis’ schemes amid the increase in cheap goods entering their markets through e-commerce platforms such as Shein, Temu and Amazon, the FT reports.
The US has allowed tariff-free imports of goods valued up to US$800, while the EU has done the same for up to items worth up to €150.
The US reformed its scheme after it saw a surge of cheap goods entering the country, with over a billion such items being imported at a value of around US$54.5bn in 2023, mostly from China or Hong Kong, according to the Guardian.
The US’ de minimis programme will not apply to Chinese or Hong Kong goods from 2 May, and will halt for other countries as soon as practicable. The EU has said it will do the same by 2028.
Compliance and paperwork
Low value item schemes were originally introduced by governments to facilitate smoother cross-border trade, particularly for SMEs.
However, with the global trade war set to uproot existing trade flows, governments have come under increasing pressure to take action to protect their domestic industries.
Helen Dickinson, the chief executive of the British Retail Consortium, said the UK’s review was “most welcome” and was “already needed”.
“With retailers seeing a rise in the number of potentially noncompliant products entering the UK market, it’s even more critical now,” she said.
However, William Bain, the head of trade policy at the British Chambers of Commerce, said the UK needed to help SMEs navigate the new customs requirements that will emerge with the end of the low value consignment relief.
“Simplifying rules and processes to make trade easier is vital to weathering the current storm,” he told the FT.
‘New era’
Rachel Reeves has said the review and changes to the TRA reflect the “new era of global trade” and “will help businesses compete fairly with international exporters, supporting a world economy that provides stability and fairness for working people and businesses alike”.
She has been in Washington DC this week attending meetings hosted by the International Monetary Fund and World Bank Group.
While in the US, she has also met with US treasury secretary Scott Bessent. She yesterday dashed hopes of an early trade deal with the US to reduce new tariffs, however, saying the UK is “not going to rush” an agreement.
UK officials have been quoted as saying the government is hopeful that a deal can be struck to reduce the higher 25% duties on cars and steel, as well as any potential higher levies on pharmaceuticals that Trump could introduce.
