UK to levy $655 million of new tariffs on low-value imports

Britain’s finance minister, Rachel Reeves, announced on Friday that she intends to raise approximately £500 million ($655 million) annually by eliminating the tariff exemption for individual goods imported into the UK that cost under £135.

The move is part of her efforts to ensure fair competition between British retailers and overseas online stores, especially those based in countries like China.

Targeting Low-Value Imports

Currently, British consumers can import goods directly from international online retailers without paying tariffs, provided the goods are below the £135 threshold. This has given overseas stores a competitive advantage over UK retailers, who must pay tariffs on bulk imports. Reeves' proposed change would level the playing field by scrapping this exemption, requiring tariffs to be applied to low-value goods as well.

The finance ministry has confirmed that Reeves plans to include the scrapping of the exemption in her upcoming budget, which will be presented on November 26. A consultation will also be launched to determine the best way to implement the new customs rules. Despite concerns from some quarters, the finance ministry reassured that the impact on consumer prices would be modest.

Retailers' Reaction and Economic Implications

Retailers have been vocal about the need for a more equitable trading environment. Major UK retailers, such as clothing chains Next and Primark-owner Associated British Foods, have lobbied for the changes, arguing that the current tariff structure allows foreign stores to undercut British prices unfairly.

George Weston, CEO of Associated British Foods, which owns Primark, supported the move, saying it would close a loophole that disadvantaged British businesses. He also highlighted concerns about safety standards being overlooked in products imported through online retailers.

"This move closes a loophole that has disadvantaged British business, damaged British high streets, and allowed proper safety standards to be ignored," Weston said, welcoming the government’s plans to address the issue.

Global Context and Impact

Reeves' plans come as part of a broader global trend. The U.S. President Donald Trump scrapped tariff exemptions on imports worth under $800 in August, and the European Union has also announced similar plans for imports under €150 ($172.65). These global shifts highlight the increasing move towards protecting domestic businesses from unfair competition posed by low-value imports.

Reeves’ initiative to remove the exemption is being seen as an attempt to support British high streets and ensure that local shops can continue to compete fairly with international sellers.

The Road Ahead

While the move is aimed at boosting the UK’s retail sector, it has sparked debate about potential price increases for consumers. The finance ministry, however, has downplayed these concerns, asserting that the impact on prices will be minimal.

As the UK government moves forward with this plan, the outcome could signal a shift in how tariffs and trade policies are structured in response to the rise of online shopping and global competition. The decision will likely have significant implications for both consumers and retailers, and it will be closely watched in the coming months.

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