Issue with type `module` exports in Next js

First of all, there seems to be no issue when using tailwind-merge directly inside a Next.js project. Example: https://stackblitz.com/edit/nextjs-wxchtk?file=pages%2Findex.js

Issue for me is when I bundle tailwind-merge along with my UI library & try to start Next.js. Example: https://stackblitz.com/edit/next-tailwind-jit-evzkdg?file=components%2Findex.js (error can be seen here)

My babel.config.js to bundle my components with tailwind-merge

const BABEL_ENV = process.env.BABEL_ENV;
const isCommonJS = BABEL_ENV !== undefined && BABEL_ENV === "cjs";
const isESM = BABEL_ENV !== undefined && BABEL_ENV === "esm";
const isBuild = !!BABEL_ENV;

module.exports = function (api) {
  api.cache(true);

  const presets = [
    [
      "@babel/env",
      {
        modules: isCommonJS ? "commonjs" : false,
        targets: { esmodules: isESM ? true : undefined },
      },
    ],
    ["@babel/preset-react", { runtime: "automatic" }],
    "@babel/preset-typescript",
  ];

  const plugins = [
    ["@babel/plugin-proposal-class-properties", { loose: true }],
    ["@babel/plugin-proposal-logical-assignment-operators", { loose: true }],
    ["@babel/plugin-proposal-private-property-in-object", { loose: true }],
    ["@babel/plugin-proposal-private-methods", { loose: true }],
    ["lodash"],
    isBuild
      ? [
          "babel-plugin-jsx-remove-data-test-id",
          { attributes: ["data-testid"] },
        ]
      : {},
  ];

  return {
    presets,
    plugins,
    env: {
      test: {
        presets: [["@babel/env", { targets: { node: "current" } }]],
      },
    },
    ignore: isBuild
      ? [
          "**/*/stories",
          "**/__tests__",
          "**/testUtils.tsx",
          "./renderlesskit.config.ts",
        ]
      : [],
  };
};

[navin-moorthy]

Thanks @dcastil for your research on this issue, I also looked into this issue: vercel/next.js#25454 beforehand.

I will try adding the exports field & create an esm build using .mjs extension.

[navin-moorthy]

It Works 🎉

I also released a new version of my package & tried - https://stackblitz.com/edit/next-tailwind-jit-evzkdg?file=components%2Findex.js

Thank you very much.