Trump ending the US tariff exemption on low value packages from overseas and current UK position

4th August 2025

President Trump moved to end the "de minimis" tariff exemption—which let shipments under $800 enter duty-free—to close what his administration called a "big scam" that's been unfairly undercutting U.S. businesses, swelling the trade deficit, and flooding the country with hard-to-inspect packages.

Imports under $800 rose from about 139 million in 2015 to over 1.36 billion in 2024, largely via fast-fashion platforms like Temu and Shein, prompting the White House to act to bolster domestic manufacturing and strengthen border security.

It's also a response to mounting safety and national-security worries. Low-value parcels are harder for Customs and Border Protection to screen and have been linked to the illicit shipment of counterfeits and opioids like fentanyl.

The executive order takes effect on 29 August 2025 after which all commercial shipments valued at $800 or less (outside the postal network) will face "all applicable duties." The change will be made permanent on 1 July 2027, under the One Big Beautiful Bill Act's repeal of the exemption’s legal authority.

Ending the de minimis exemption will effectively act as a new tax on everyday imports, pushing up prices for a wide range of low-cost goods and squeezing household budgets.

A broad consensus among economists is that tariffs are borne by consumers in the form of higher retail prices. Once packages valued at $800 or less lose their duty-free status on August 29, buyers will see extra charges tacked onto everything from fast-fashion clothes to small electronics.

Early economic modelling of the wider reciprocal-tariff package—including a 10 percent baseline levy—estimates that U.S. households could pay an average of $861 more per year in higher costs and reduced purchasing power, contributing to slower growth and a subtle but pervasive rise in living expenses.

Historical precedent underscores the point: when washing machines and dryers were hit with 20-50 percent tariffs in 2018, unit prices jumped by about $86-92, translating into $1.5 billion in added consumer spending annually. That example shows how even targeted levies can ripple through prices economy-wide.

UK Position

Low-Value Import Rules in the UK
The UK applies a “low-value” threshold of £135 for customs purposes. Goods imported from outside the UK (or, for Northern Ireland, outside the UK and EU) with a total value of £135 or less do not attract customs duty. Any parcels above £135 will be assessed for both import VAT and customs duty at the point of entry based on the commodity type and origin.

VAT on Low-Value Parcels
All goods (except gifts under £39) sent to the UK are subject to VAT.

For parcels valued at £135 or less that you purchase yourself, the UK seller or the online marketplace must charge and remit VAT at the point of sale.

When VAT has already been paid to the seller, you won’t be billed again by the courier upon delivery.

Gift Exemption
Gifts sent by individuals and valued at £39 or less are exempt from import VAT.

If a gift is over £39 (but still under £135), VAT will be due, typically collected by the delivery company before release of the parcel.

Excise Goods
Alcohol, tobacco and other excise-tracked items incur duty and VAT regardless of import value.

There is no de minimis relief for excise goods; they always face import charges if shipped from outside the UK or, for Northern Ireland, from outside the UK and EU.

Key Takeaway
Compared to the U.S. de minimis exemption change, the UK’s low-value regime means:

No customs duty on non-excise items under £135.

VAT on low-value goods is collected up front by sellers, not by couriers.

Small gifts (≤£39) clear customs VAT-free.

This framework ensures that most low-value imports clear UK borders without additional surprise charges.