The UK’s a dumping ground for cheap imports and businesses and the environment are paying the price

This post is by Laura Scott, solicitor, and Oliver Scutt, legal director, at the law firm Bates Wells.

Cheap imports are entering the UK on an extraordinary scale. In 2024-25, £5.9 billion worth of low value goods entered the UK under the £135 ‘de minimis’ customs duty exemption and now around 1.6 million such parcels arrive every day. It’s placing increasing pressure on UK businesses, distorting competition and undermining efforts to build a more circular economy. It’s a particularly serious problem for the textile industry.

The exemption made sense when the cost of collecting customs duties could exceed the revenue raised. But in the age of ultra-fast e-commerce, it has become a structural advantage for overseas sellers shipping goods directly to UK consumers, allowing them to undercut UK businesses daily.

The UK government has recognised the problem and committed to abolish the exemption. However, although it has accelerated its plans by six months, abolition is not due until October 2028. That leaves UK businesses competing on an uneven playing field for another two years, while our tax system continues to incentivise precisely the kind of over-consumption our environmental policy is supposed to discourage.

Cheapness is an illusion The attraction of ultra-cheap imports is obvious and understandable to a degree, particularly after years of downward pressure on household finances. But accessibility should not be confused with affordability.

The extraordinary growth of ultra-fast fashion and low cost e-commerce is not simply the result of efficiency or innovation. It has been enabled by ineffective policy and regulation distorting the market. Chief amongst those is the de minimis exemption.

From a consumer perspective, the problem is that the purchase price of many ultra-cheap imports fails to reflect their wider costs. Environmental impacts, resource use and waste are largely invisible at the checkout so, if we are serious about building a more circular economy, policy needs to help shift the balance towards products that are durable, repairable and reusable, rather than rewarding a take-make-waste business model.

Tax and environmental policy pull in opposite directions Few sectors illustrate this contradiction more clearly than fashion. Businesses are being encouraged to invest in durability, repair, reuse, recycling infrastructure and more sustainable production. Yet our outdated customs duty system and lack of effective regulation gives the upper hand to overseas manufacturers and brands able to ship cheap, low quality clothing directly into the UK.

Encouragingly, the EU has introduced a raft of sustainability driven legislation under its Green Deal which the UK would do well to follow. But we can’t incentivise and grow a more circular, responsible economy, while maintaining taxonomy and regulation that favours (albeit passively) the alternative. So, if the government is serious about having a Circular Economy Growth Plan, its industrial strategy must pull in the same direction.

The future of fashion regulation in the UK white paper, co-authored by Bates Wells and Fashion Declares, highlights both the economic contribution of the fashion industry and the need to accelerate its transition towards a more sustainable, circular and regenerative business model.

The playing field needs levelling The businesses making substantial use of the existing arrangements include some of the world’s largest e-commerce platforms. Companies such as Shein and Temu have built highly successful direct-to-consumer models that deliberately take advantage of custom duty exemptions. UK retailers rightly argue that this creates a structural advantage for overseas businesses and a competitive disadvantage for domestic businesses, rewarding low price at the expense of better quality, craftsmanship and service.

Notably, the EU and the US have already removed their equivalent de minimis exemptions. Abolishing the UK’s exemption won’t be a silver bullet to cure over-consumption. However, it would remove an obvious distortion, align with international policy and signal that the government is taking pragmatic steps to support UK businesses, by restricting the flow of cheap, low quality imports and levelling the playing field. Accelerating reform would also support fairer competition, strengthen public revenues and better align tax policy with the UK’s industrial and environmental ambitions.

In summary, the de minimis exemption was designed for another era of trade. In an age of ultra-fast e-commerce, squeezed British businesses and urgent environmental pressures, it’s increasingly a loophole we cannot afford to leave open.

Bates Wells, a London-based UK law firm, was the first to become a B Corp.