The end of de minimis: Another Brexit for SME exporters?

A rule change in Washington could hit thousands of UK SMEs, raising costs and cutting off a key driver of innovation. On 29 August 2025, the USA eliminated its $800 de minimis threshold, ending an exemption that had allowed frictionless, duty-free shipments of low-value goods. This isn’t a minor technicality, it underpinned UK SMEs’ ability to sell directly to US consumers, compete globally without prohibitive costs, and experiment with new products.

Postal services across Europe have already suspended deliveries to the US while US Customs clarifies procedures, leaving SMEs in limbo. The timing couldn’t be worse: SME confidence is already low, and the move signals a broader trend away from open, low-friction trade. Past shocks like Brexit show how damaging new barriers can be. Businesses will need to adapt fast, and the UK Government must accelerate its trade strategy to soften the impact.

A great leveller in global trade

Introduced in 2016, the US threshold allowed shipments under $800 to enter duty-free. In 2021 alone, UK businesses shipped $5 billion worth of goods under this exemption, with 80% via e-commerce, mostly low-value clothing and fashion items. It gave even the smallest sellers access to the world’s largest consumer market, bypassing complex paperwork and duties.

Compared to other markets, the US level was unusually high:

• UK – £135

• EU – €150

• Canada – CAD 20

• Australia – AUD 1,000

The US government cited concerns about fraud, unfair foreign competition, and boosting domestic manufacturing as reasons for its removal.

An unseen driver of innovation

This threshold wasn’t just a cost saver; it was an innovation enabler. By stripping away duties and paperwork, it allowed SMEs to act like multinationals, testing products abroad and scaling exports without prohibitive risk. For smaller firms without dedicated export teams, this was critical. It encouraged “learning by doing”, experimenting with product cycles, fulfilment models, and direct consumer relationships.

Studies by the OECD and others confirm that such thresholds disproportionately benefit SMEs by reducing fixed trade costs. The result? More firms engage in trade, boosting growth and innovation. De minimis quietly functioned as a free-market mechanism, helping SMEs overcome structural barriers to global markets.

Is this another Brexit?

The timing feels uncomfortably familiar. In Q2 2025, only 22% of SME exporters reported rising export orders, while 27% saw declines. Micro-exporters fared worst.

Brexit offers a cautionary tale. After the TCA in 2021, nearly half of exporters (49%) reported difficulties adapting, versus just 16% who found it easy. Problems included initial confusion, backlogs, and the long-term burden of higher costs.

Some SMEs exited the EU market entirely, while others set up EU bases to cope.

The US change may not be as seismic, but similar patterns loom: postal suspensions are causing confusion, and exporters now face permanently higher costs. Some will cut back, others may set up US operations to avoid friction.

A broader shift and the need to adapt

The suspension of postal deliveries is the first ripple, but this is part of a global trend toward tighter control of lowvalue imports. The EU is considering scrapping its €150 threshold, centralising customs, and imposing a €2 charge per item. The UK may review its £135 threshold, with HM Treasury projecting £1 billion in extra duties. These changes could hit consumer-facing sectors hard and discourage SMEs from exporting altogether.

For smaller firms, the pressure is rising. To adapt, they must:

• Partner with distributors and logistics providers to offset costs

• Ensure proof of origin compliance for varying tariffs

• Seek guidance from Chambers of Commerce for navigating new rules

Over the long term, competitiveness depends on a proactive UK trade strategy: stronger supply chains, targeted SME support, modernised digital trade systems, and trade negotiations that reduce, not escalate, barriers.

As friction increases, the removal of de minimis is a wake-up call. SMEs must innovate, adapt, and forge new partnerships to stay competitive in a world where low-friction trade is no longer guaranteed.