Ending tax loophole for cheap Chinese goods ‘risks higher prices’

Removing the tax “loophole” that allows Chinese ecommerce giants to ship cheap goods to Britain would cause chaos at customs and lead to price rises and delivery delays for consumers, the big delivery providers have warned.

Royal Mail, DHL Express and Evri are urging the government not to listen to retailers’ calls to remove the tax rule that allows shipments worth up to £135 to be imported from overseas without incurring customs duty because collecting duties on more low-value goods would cause “added friction” at the UK’s borders.

Most ecommerce goods shipped under the de minimis threshold come by air.

The global logistics company DHL Express said lowering the de minimis threshold would “increase the number of customs declarations that our industry needs to process for customers”.

This would contribute “to longer lead times and additional costs for consumers, whilst the customs authorities, transport companies and shippers adjust their systems and resources to accommodate the changes”, the company said.

Royal Mail is also understood to have expressed concerns over customs friction, delays and increased prices.

Evri said any changes would need to be “looked at with care and considered alongside improvements in customs administration so that … consumers and businesses reliant on imports are still afforded choice and easy and fast access to products internationally”.

Britain’s biggest retailers have been calling for the government to scrap the rule in the UK after President Trump’s recent decision to scrap the exemption for small packages worth less than $800 that are shipped to the United States.

Retailers, including Sainsbury’s and Currys, fear that it could cause a “flood” of lower-quality goods being rerouted from the US to Europe. They also believe the rule creates “unfair playing field” between UK retailers and Chinese ecommerce companies such as Shein and Temu.

The British Retail Consortium, the trade body for retailers, warned this week: “A lot of goods coming in under the low-value import rules are not necessarily subject to the same product safety or ethical and environmental standards that UK consumers might expect.”

Retailers believe there is an opportunity to modernise trade rules and protect the domestic industry from being undercut, while ensuring fair competition and consumer protection.

According to HM Revenue & Customs, the current regime for low-value goods nets the UK government £1.5 billion annually in supply VAT.

Amanda Francis, chief executive of the Association of International Courier and Express Services, said: “At a time when UK business is facing pressures with increased costs and international competition it would be a retrograde step to change a very efficient and cost-effective, world-class regime.

“Reducing de minimis would potentially increase inflation by directly impacting prices for consumers.”

DHL said: “The role of express companies and the overall transport industry is to help customers navigate the international trade environment, in compliance with applicable rules and regulations.”

It said it was “monitoring the situation and will continue to work with our customers to help them understand and adapt to any changes in policy around the world”.

Separately, DHL has said it will temporarily suspend business-to-consumer (B2C) shipments to the US with a declared value exceeding $800. This is due to increased delays experienced by shipments valued over $800 caused by tariff uncertainty.

UK retailers have said this is a “major nightmare for UK brands trying to get things to US customers” and are hoping other players including UPS and FedEx do not follow suit.