What should top the list of Labour’s key priorities? You might consider revitalizing the sluggish growth of the economy, reducing NHS waiting times, or addressing the severe housing shortage in Britain. However, surprisingly, one of Labour’s focuses is on increasing online shopping costs for everyday families.

Rachel Reeves, the chancellor, is currently assessing the lesser-known “de minimis exemption”, a crucial regulation that permits parcels valued under £135 to enter the UK without incurring import duties. Labeling this loophole as a problem, Reeves argues that it allows direct-to-consumer giants like Shein and Temu from China to compete unfairly with local British retailers. Her proposal is to eliminate this exemption, thereby increasing tariffs on low-value imports and promoting fair competition.

On the surface, Reeves’ argument for a “level playing field” seems logical. Major retailers such as Next, Sainsbury’s, and Superdry complain about having to pay substantial customs duties on large shipments, while Chinese competitors can sidestep these fees by shipping items individually. With the US imposing high tariffs on Chinese products and both America and Europe planning to remove their own exemptions, it’s likely that more affordable Chinese imports will soon be coming into the UK, raising concerns of market dumping, according to the British Retail Consortium.

However, this protective stance is somewhat misleading. Is it really the government’s responsibility to shield high street giants from competitors who are merely utilizing existing tax structures that offer better prices to consumers? The real economic issue may not be the duty-free small parcels but rather the tariffs on larger imports of clothing, toys, and gadgets. If retail giants desire a fairer market, they could advocate for the removal of these tariffs instead.

Maintaining the de minimis exemption serves a functional role in trade facilitation. Low-value packages incur minimal duty costs, meaning waiving these fees accelerates clearance and reduces bureaucracy. Eliminating this exemption would require intricate customs procedures for every small package, leading to delays, extra paperwork, and increased strain on Royal Mail and courier services. As a result, many countries sensibly allow low-value imports to pass through swiftly, enhancing trade efficiency.

According to Copenhagen Economics, hundreds of millions of parcels are imported into the UK annually under this exemption. The administrative costs of collecting duties often exceed the revenues generated. Coupled with compliance challenges for small businesses importing essential items, extending tariffs to low-value imports appears to be a misguided strategy.

While it is true that the expansion of ecommerce brings about potential misuse, with some importers dividing shipments into smaller parcels to bypass duties, such occurrences may not be widespread enough to warrant imposing tariffs on every affordable item. A more reasonable response would be to tackle the platforms that facilitate these illegal activities directly.

In essence, what is unfolding is the UK aligning with an international trend of anxiety over inexpensive Chinese imports. The US suggests that these parcels can be routes for drugs and tax evasion, while Brussels has openly stated that its decision to abolish the EU’s own €150 exemption is aimed at collecting an additional billion euros in revenue, disregarding the customs and customer burdens.

The outcome of this initiative would ultimately disadvantage British consumers the most. If the exemption is removed, a £50 dress could see its price rise to £56 following a 12 percent tariff, not accounting for any new administrative fees. Recent research by economists Pablo Fajgelbaum and Amit Khandelwal in the US indicated that the lowest-income households gain the most from duty-free imports and would thus be hit hardest by their removal.

Consequently, by eliminating this exemption, Reeves would compel British consumers to support a more favorable competitive landscape for high street businesses.

As families are tightening their budgets, raising prices on everyday items like leggings and smartphone cases as a method of supporting high street policies seems like an unusual priority.

Ryan Bourne is an economist at the Cato Institute and editor of the book The War on Prices.