Businesses in the UK are expressing their support for the government’s decision to review the rule that allows small parcels to enter the country duty-free. According to major retailers, this rule gives an unfair advantage to overseas firms such as Shein and Temu over British businesses. Theo Paphitis, former Dragon’s Den star and owner of retail group Ryman and Robert Dyas, expressed to the BBC that this measure is negatively impacting UK High Streets.
The current rule permits international retailers to send packages worth less than £135 to the UK without facing import taxes. However, the Federation of Small Businesses (FSB) highlighted that eliminating this exemption could potentially increase costs for small businesses and their customers. Retailers have long been campaigning for a change in this rule, stressing its detrimental effects on the retail landscape and high streets. The government has announced a consultation on the matter, aiming to review the customs treatment of low-value products entering the UK.
Chancellor Rachel Reeves disclosed the government’s plan to address concerns raised by retailers regarding being undercut by overseas competitors. UK businesses that import larger shipments are subject to taxes, and they argue that cheaper goods may not meet the same environmental and ethical standards they adhere to. The ‘de minimis’ rule, which has garnered renewed interest, was compared to a similar measure recently scrapped by US president Donald Trump in the midst of his trade war with China.
There are looming fears in the UK that China may flood the market with goods to evade the tariffs imposed by President Trump. Retailers such as Sainsbury’s, Currys, and the British Retail Consortium have voiced their support for the government’s initiative. The chair of the Federation of Small Businesses cautioned that scrapping the ‘de minimis’ rule could impact trading and inflation. Meanwhile, critics argue that this rule leads to job losses and revenue decline for the UK, as businesses struggle to compete with cheaper international rivals
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