“We built something good and it’s been knocked down – not just by regulations, rising costs and extra charges, but the atmosphere created by endless new regulations and geopolitics which make consumers hesitant to spend.”
This was the response of one SME to a question I’d asked them about some of the latest changes affecting international trade. In this instance, Jane Garner, a partner at Deadgoodundies.com, was referring to the introduction of new customs duties and fees by the EU for imports valued under €150.
Previously, these low value goods could enter the bloc without customs duties needing to be paid. This relief, often referred to as ‘de minimis’, has been a key driver of SME trade over the last few decades, particularly in the e-commerce sector.
Similar schemes have operated in the US and UK as well. The Trump administration scrapped its de minimis relief for goods valued under $800 last year. This led to the EU accelerating revision of its own scheme while the UK is also currently consulting with industry on its version.
“The main driver is the explosion in e-commerce”, said Gordon Wright, director of European operations, on a recent Global Trade Live webinar, hosted by the Chartered Institute of Export & International Trade.
“The traditional customs procedures that have been in place for many years are no longer fit for purpose… there has to be a whole new approach”.
SMEs enter ‘the customs system’
The change will “bring small businesses into the customs system” of needing to complete paperwork and pay customs fees, said Kate Foster, deputy head of international affairs at the Federation of Small Businesses (FSB), on the same webinar.
This includes a new €2 handling fee being introduced to cover customs processing costs, and an interim €3 customs duty being introduced to “bridge the gap” ahead of a new EU Customs Data Hub being created under the bloc’s broader customs reform programme. Slated for 2028, this hub will enable the EU to implement a “permanent customs duty regime” for all goods. For now, the fees are set to be introduced by all EU member states by July 2026, but some countries are introducing the handling fees sooner, including France, Italy and Romania.
The changes have been primarily designed to address the surge of cheap imports into the continent from Chinese e-commerce giants like Temu and Shein. The Commission has said that a total of 4.6bn low value items were imported into the EU in 2024, with 91% of these coming from China.
High impact on low value goods sellers
SME exporters from other third-party countries, like the UK, are set to be affected by these changes as well.
“Well over 90% of our parcels into the EU currently qualify under de minimis regulations,” says Garner. “Europe used to be a cornerstone of our exports, now it’s all but disappearing”.
“With low value business-to-consumer shipments, which are individual to each customer, every additional charge is another barrier. The addition of €2 on a product that costs €20 is a 10% price rise which is unsustainable.”
“Prior to December 2024, EU customers accounted for approximately 10% of my annual sales,” says Sophie Cooke, the founder of Sheffield-based milliner Imogen’s Imagination.
“However, given the looming increased cost of trading to the EU, I cannot hand on heart say that any investment in becoming compliant will be recovered. I do not sell business-to-business, all my products are shipped directly to customers using the international postage systems, or via DHL courier services.”
Another SME, a homeware company that has asked to remain anonymous, has said that the changes will also affect its ability to send samples to EU customers – something that is essential for their products, which customers prefer to “try before they buy”.
“These fees are very disproportionate to the value of goods being sent,” they said.
Administrative burden adds to cost
The administrative requirements that de minimis changes will lead to for SMEs are also a significant factor. On a recent LinkedIn poll, the Chartered Institute invited traders to let us know what the biggest challenge posed by de minimis changes would be.
Just under half of respondents (49%) said ‘increased administration’, with about a fifth (21%) saying ‘border delays’. Intriguingly, price impacts and supply chain disruption scored lower on 15% each.
Grace Thompson, UK public affairs lead at The Chartered Institute, reflected that while administrative burden is an indirect cost, largely impacting resource, it is one that disproportionately affects SMEs.
“Many smaller businesses I speak to are just trying to get through the day and balance any number of spinning plates that they have to allocate their resources to. This is why the increased administrative burden of new regulations – which have been plentiful in recent years – has such an impact.”
‘Unintended consequences’
Despite the hassle that the changes to de minimis will likely cause for many British SME exporters, there is an understanding among the business community as to why these changes are being introduced.
The EU, like the UK, continues to operate in an increasingly competitive global marketplace, and there is an acknowledgement that cheap Chinese imports have undercut and hindered sales for European businesses.
IP infringement by Chinese companies has also been a longstanding source of concern for SMEs in Europe and North America.
“Companies like Shein and Temu have exploited loopholes and forced the EU to crack down, as seen in the US,” says Cooke.
“These two e-commerce sites are also the key players in wide-scale IP infringement against UK design brands like mine. Design theft is endemic and a keystone of many sellers' business models.
“In summary, I'm not anti-regulation and, if anything, I want these exploitative companies to be held to account. They make international trade even harder for businesses like mine – those who trade ethically, with integrity and with joy at every overseas sales.
“I miss writing thank you notes in the language of the customer."
“Again, good intentions, unintended consequences,” says Garner.
“In going after the big fish, new rules are catching and killing the little fish. Maybe nobody thinks they matter but they’re the basis of the whole ecosystem.
Heavy toll
For UK SMEs, de minimis is the latest in a string of regulatory changes that have made trade with the EU more complex.
Cooke tells me that she’s still grappling the impact of the EU’s General Product Safety Regulation (GPSR), whose complexity – along with an ongoing IP infringement case – has led to her company not exporting to the bloc since 2024.
“As a one-woman business, the regulatory requirements for my products – handmade hats, fascinators and hair accessories – are quite overwhelming,” she says.
“Not only is GPSR a consideration, the extension of the Verpackung scheme to further EU member states, along with the newest product passport requirements for textiles, are additional challenges.
“With capped resources, I have to pick my battles carefully. Currently, restarting sales to the EU seems like too big a mountain to climb. The peak just gets further and further away with each new regulatory announcement.”
Garner feels similarly, albeit her company is a more established exporter with sales into markets around the world.
“We started Deadgoodundies.com in 2004 so we’re experienced in exporting and handling the ups and downs of exporting worldwide, but these days you always wonder what’s next?” she says. “It’s a massive disincentive that undermines growth.”
Garner and Cooke’s experiences tally with what Foster said she was hearing from the small business community in her role at the FSB, when speaking on our webinar.
“It’s not that small businesses don’t want to comply with these rules, it’s that it’s very difficult in terms of the cost”.
UK next?
Unfortunately, the rate of change is unlikely to slow.
The ending of de minimis in the EU is part of a broader programme of customs reform which also includes new rules and procedures designed to support the bloc’s sustainability goals, including its carbon border adjustment mechanism and new digital product passports. During our webinar on these changes in February, only about half of the audience said they were aware of the EU’s customs reform programme when asked in a poll.
Foster adds that the instability in the US is also likely to continue, as seen with further recent twists in the saga around Trump’s tariff regime.
“Businesses need to stop seeing the current global geopolitical instability, particularly centred on what the US is doing in trade, as an aberration,” she said. “We need to start approaching it as a new norm when it comes to business planning.”
Thompson adds that the UK is also reviewing reliefs for low value imports, with a public consultation into the matter currently underway. This could lead to new costs and administrative requirements for importers.
“There was no doubt that the UK would need to reform our own low value imports requirements to better align with trading partners,” she said.
“However, we are feeding back to government carefully through the public consultation, in order to share the challenges that will arise, particularly from transitional disruptions (e.g. longer processing times), and to attempt to mitigate additional burdens on small businesses as much as possible.”
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