If you made a ranking of Labour’s priorities, what would you put near the top? Reviving our anaemic economic growth rate, perhaps? Slashing NHS waiting lists? Tackling Britain’s catastrophic housing shortfall? You’d probably get many pages down before writing: “Making online shopping pricier for ordinary families.”

Yet, remarkably, Rachel Reeves has precisely this goal in mind. The chancellor is reviewing the little-known “de minimis exemption”—the obscure but vital rule allowing parcels worth under £135 to enter the UK without import duties. Reeves calls this a “loophole” that enables Chinese direct-to-consumer giants such as Shein and Temu to undercut British high street retailers. Axe the exemption, Reeves suggests — so raising tariffs on low-value packaged goods — and fair competition will triumph.

At first glance, this “level playing field” argument sounds reasonable. Retail heavyweights such as Next, Sainsbury’s, and Superdry grumble that they must pay hefty customs duties on bulk imports, while Chinese competitors can dodge them by sending items parcel-by-parcel. With the US slamming heavy tariffs on Chinese goods and both America and Europe gearing up to abolish their own de minimis thresholds, many more cheap Chinese imports could be diverted here soon, too. The British Retail Consortium fears “dumping”.

Yet, there’s something deeply misleading about this protectionist narrative. Is it really the government’s job to protect high street giants from rivals whose only crime is using existing tax laws to give customers a better deal? Surely, the true economic distortion here isn’t that small parcels slip through customs duty-free — it’s that bigger shipments of clothes, toys, and gadgets attract damaging tariffs. If high street retailers want a level playing field, they could always lobby to abolish these taxes.

Without addressing that fundamental distortion to free trade, a de minimis exemption serves a practical purpose. Low-value import packages generate trivial duty amounts, so waiving them speeds up clearance and cuts red tape. Scrapping this exemption would mean every small parcel requires detailed customs procedures — triggering delays, new paperwork, and overwhelming pressure on Royal Mail and courier services. Most countries, therefore, sensibly let low-value packages fly through, facilitating more and smoother trade.

Perhaps hundreds of millions of parcels currently enter the UK this way each year. According to Copenhagen Economics, the administrative cost of collecting duties would often exceed the revenue raised. Add in compliance burdens for small businesses importing essential materials, and expanding tariffs to these low-value imports looks deeply misguided.

Of course, as ecommerce expands, there are opportunities for abuse. Some importers split shipments into smaller parcels to evade duties. And without routine checks, there’s undoubtedly some VAT evasion and slippage on regulatory standards aided by this exemption. But is that really so widespread as to justify tariffs on every budget pair of trainers? Surely targeted action against platforms that house such lawbreaking is the proportionate response.

No, what’s really playing out here is the UK following suit on an international panic about cheap Chinese imports. America claims these parcels are conduits for drugs and tax evasion. Brussels openly admits its decision to scrap the EU’s own €150 exemption is about grabbing an extra billion euros of revenue, whatever the burden on customs and customers.

Make no mistake: it’s British shoppers who will suffer most. Ending the exemption would see a £50 dress jump to £56 after a 12 per cent tariff, and that’s before new administrative costs and fees. A recent American study by economists Pablo Fajgelbaum and Amit Khandelwal found that the poorest households benefit disproportionately from duty-free parcel imports there — and so would suffer most from their abolition.

In ending this exemption, Reeves would, therefore, force British customers to pay to subsidise a more favourable competitive environment for high street firms.

At a time when families are counting pennies, jacking up leggings’ and smartphone case prices as a form of high street industrial policy seems an odd priority indeed.