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The British Chambers of Commerce (BCC) has warned that removing the UK’s tariff exemption for low value imports could push up prices and reduce trade intensity for small businesses.
The government is considering the move after the US removed its ‘de minimis’ exemption, while the EU intends to introduce new handling charges for cheaper packages.
Research of 608 businesses by the BCC Insight Unit found that 52% of goods importers would pass a 5% to 10% cost increase on to consumers.
Only 20% of respondents said they could absorb such costs. About 60% of firms were unaware of the planned changes or unsure how they would be affected.
Meanwhile, a quarter of exporters said a 10% to 15% cost increase from foreign tariff changes would put more than half of their overseas sales at risk.
Data also showed that 21% of firms would switch suppliers to mitigate the impact. Another 20% would consolidate shipments, while 12% would scale down their trade activity.
A government consultation into the plans closed last Friday (6 March) and the BCC has submitted a response. It said that while the UK must respond to action by the US and EU, to avoid unfair competition from cheaper goods flooding the domestic market, any reforms must be “proportionate” and align with the international response.
The chamber network also expressed concern that charges per item would be inflationary. It claimed these fees would disproportionately affect small businesses and e-commerce customers.
William Bain, head of Trade Policy at the British Chambers of Commerce, said: “E‑commerce matters greatly to the UK economy and global trade. We know the trend globally is to abolish de minimis thresholds and levy duties on low value imports given their huge growth in recent years.
“The US has scrapped its de minimis threshold, and the EU is planning new charges on cheaper imports from July this year. This will put our exporters’ sales under pressure, and we must respond to ensure we have a level-playing field.”
He added: “But we would urge ministers not to introduce charges per item or consignment by import. Our research shows the increased costs will feed through into higher prices. The Government should also retain VAT being charged at point of sale on transactions for these purchases – a practice followed by many countries in global trade. Its retention would avoid unnecessary complications and additional friction on cross‑border e‑commerce sales.
“As any UK changes will not happen until 2029 at the earliest, we would also urge firms to be on high alert to report suspected dumping or import surges. Until we catch up, the UK will be at a competitive disadvantage and the Trade Remedies Authority will need good intel to protect our industries.”
