The Costly Chaos: UK Small Businesses Brace for Impact as US Changes Parcel Tax Rules

UK small businesses are sounding the alarm over new taxes on sending low-value parcels to the US, caused by President Trump cutting the de minimis exemption. This change means parcels valued under $800 will now incur taxes, leading to uncertainty and potential price hikes for UK firms. The Federation of Small Businesses warns that increased shipping costs and new barriers will hinder smaller enterprises from competing against larger brands.

For example, Helen Hickman, owner of a wool company, has halted shipping to the US as she lacks the necessary information to quote customers accurately on shipping costs. Previously, her business relied on 30% of sales from US customers, but now she fears that parcels may end up excessively charged or even lost.

The taxing changes could mean a $100 order might now face an additional $30 to $50 in costs, making it harder for small businesses to thrive. Julian Boaitey, who started his skincare brand, notes this change might force him to localize production in the US, whereas Jay Begum’s craft business has seen a significant dip in orders, leading her to stop shipping to the US entirely.

Tina McKenzie from the FSB highlights that over 20% of small businesses might cease exporting to the US, warning that the de minimis cut will raise costs and complicate international trade. Sophie Arnold, a jeweler, expressed concern that while larger companies can absorb these costs, smaller businesses will face financial strain, with some considering additional jobs to offset potential losses.

Responses to the crisis call for more government support, such as raising the Trading Allowance to help small firms cope with extra tariffs. As the situation evolves, the hope remains for clearer regulations to facilitate smoother trade between the UK and US, ultimately benefiting small businesses striving to reach customers across the Atlantic.