UK Childrenswear Founder Urges UK Government to Shield Small Businesses from US Tariff Threat

The de minimis exemption, a section of US law, currently allows individuals to receive one package per day from outside the US valued up to $800 without incurring import taxes or duties. Originally intended for American tourists sending small purchases home, this exemption has become crucial for many of the UK small businesses selling directly to US consumers. The exemption has been key to the success of online retailers like Shein and Temu, who ship low-cost goods directly to U.S. shoppers.

This week, alongside broader global tariff measures, the US administration announced the end of de minimis treatment for low-value imports specifically from China and Hong Kong, effective from 2nd May. While the future of the exemption for imports from the rest of the world, including the UK, remains uncertain, any removal or limitation would pose a significant threat to UK SMEs. Maintaining this policy for UK-US trade would provide vital relief for small UK businesses already navigating a challenging domestic economic landscape and persistent cost inflation.

Hull highlighted the potential repercussions for UK businesses if the Section 321 exemption is removed:

• Reduced Competitiveness: Higher costs for US consumers buying UK products would make UK brands less attractive.
• Shipping Disruptions: Increased customs clearance processing could lead to significant shipping delays.
• Return Complications: Duties paid on returned goods would no longer be reclaimable, creating logistical and financial burdens.

These factors could collectively lead to decreased sales, the need for price increases, and a potential loss of market share as US customers opt for local alternatives.

"The prospect of increased tariffs on goods being imported to the USA without de minimis exemptions is worrying for small businesses like Sockatoos, as we have a significant customer base in the USA," stated Natalie Hull. "Shipping costs and currency risk are already high, so adding a further tariff burden will create a substantial barrier for our US-based customers."

Hull continued, “Sockatoos is a unique product in its early stages of growth. Discoverability is key for us. Without economies of scale and with our commitment to premium quality fabrics and design, retailing into the US will inevitably become more expensive for consumers. While Sockatoos may have to consider absorbing some of this impact, many small, aspiring businesses in the UK will face similar challenges. Passing the cost onto our valued customers would also limit our ability to invest in marketing and build brand awareness. Therefore, we strongly urge the UK Government to prioritise negotiating a continued de minimis exemption for UK businesses in their discussions with the US.”

"We are already operating with tight margins, striving to offer our customers a premium, ethically produced product – our signature all-in-one trousers with socks attached – at a fair price," Hull explained. "The introduction of blanket tariffs by the US without exemptions will make our products less competitive in the American market, which is a key area for our growth. We have invested significantly in optimising our online presence for US sales, for example."

The outcome of these tariff negotiations will directly impact Sockatoos' growth trajectory in the US market and underscores the broader challenges faced by small UK businesses in navigating the complexities of the global economy. It represents yet another hurdle for start-ups already contending with numerous obstacles.

Hull concluded by calling on political leaders, stating, "We urge Keir Starmer and the government to make the protection of UK small businesses a priority in their dealings with the US and to fight to maintain the vital de minimis exemptions."