Popular online shopping meccas Temu and Shein have finally broken their silence, warning of potential price hikes starting next week due to Donald Trump’s tariffs.
Temu is a China-based e-commerce platform that has grown as popular as Amazon for global shoppers making cross-border purchases, according to 2024 Statista data. Its tagline, “Shop like a billionaire,” is inextricably linked to the affordability of items on its platform. And although Shein—which vows to make global fashion “accessible to all” by selling inexpensive stylish clothing—moved its headquarters from China to Singapore in 2022, most of its products are still controversially manufactured in China, the BBC reported.
For weeks, the US-China trade war has seen both sides spiking tariffs. In the US, the White House last night crunched the numbers and confirmed that China now faces tariffs of up to 245 percent, The Wall Street Journal reported. That figure includes new tariffs Trump has imposed, taxing all Chinese goods by 145 percent, as well as prior 100 percent tariffs lobbed by the Biden administration that are still in effect on EVs and Chinese syringes.
Last week, China announced that it would stop retaliations, CNBC reported. But that came after China rolled out 125 percent tariffs on US goods. While China has since accused Trump of weaponizing tariffs to “an irrational level,” other retaliations have included increasingly cutting off US access to critical minerals used in tech manufacturing and launching antitrust probes into US companies.
For global retailers, the tit-for-tat tariffs have immediately scrambled business plans. Particularly for Temu and Shein, Trump’s decision to end the “de minimis” exemption on May 2—which allowed shipments valued under $800 to be imported duty-free—will soon hit hard, exposing them to 90 percent tariffs that inevitably led to next week’s price shifts. According to The Guardian, starting on June 1, retailers will have to pay $150 tariffs on each individual package.
The Biden administration has proposed rules that could make it more costly for Chinese e-commerce platforms like Shein and Temu to ship goods into the US.
In his announcement proposing to crack down on “unsafe, unfairly traded products,” President Joe Biden accused China-founded e-commerce platforms selling cheap goods of abusing the “de minimis exemption” that makes shipments valued under $800 duty-free.
Platforms taking advantage of the exemption can share less information on packages and dodge taxes. Biden warned that “over the last 10 years, the number of shipments entering the United States claiming the de minimis exemption has increased significantly, from approximately 140 million a year to over 1 billion a year.” And the “majority of shipments entering the United States claiming the de minimis exemption originate from several China-founded e-commerce platforms,” Biden said.
As a result, America has been flooded with “huge volumes of low-value products such as textiles and apparel” that compete in the market “duty-free,” Biden said. And this “makes it increasingly difficult to target and block illegal or unsafe shipments” presumably lost in the flood.
Allowing this alleged abuse to continue would not just hurt US businesses like H&M and Zara that increasingly struggle to compete with platforms like Shein and Temu, Biden alleged. It would also allegedly make it “more challenging to enforce US trade laws, health and safety requirements, intellectual property rights, consumer protection rules, and to block illicit synthetic drugs such as fentanyl and synthetic drug raw materials and machinery from entering the country.”
Raising duties could make cheap goods shipped from China more expensive, potentially raising prices for consumers who clearly flocked to Shein and Temu to fulfill their shopping needs as the pandemic strained families’ wallets and the economy.
Specifically, Biden has proposed to exclude from the de minimis exemption all shipments “containing products covered by tariffs imposed under Sections 201 or 301 of the Trade Act of 1974, or Section 232 of the Trade Expansion Act of 1962.” That would include, Biden specified, “some e-commerce platforms and other foreign sellers” that currently “circumvent these tariffs by shipping items from China to the United States” and “claiming the de minimis exemption.”
New rules would also require e-commerce platforms to share more information on shipments, “including the 10-digit tariff classification number and the person claiming the de minimis exemption.” That would help weed out unlawful de minimis shipments, Biden suggested.
Shein and Temu defend business models
Neither Shein nor Temu seem ready to let the proposed guidance slow down their rapid growth.
“Since Temu’s launch in September 2022, our mission has been to offer consumers a wider selection of quality products at affordable prices,” Temu’s spokesperson told Ars. “We achieve this through an efficient business model that cuts out unnecessary middlemen, allowing us to pass savings directly to our customers.”
Temu’s spokesperson told Ars that the company is currently reviewing the new rule proposals and remains “committed to delivering value to consumers.”
“Temu’s growth does not depend on the de minimis policy,” Temu’s spokesperson told Ars.
Shein similarly does not seem fazed by the announcement. Starting this year, Shein began voluntarily sharing additional information on its low-value shipments into the US as part of a US Customs and Border Protection (CBP) pilot program. That change came after CBP expanded the pilot last year in its mission to test out ways to “identify and target high-risk shipments for inspection while expediting clearance of legitimate trade flows.”
Shein’s spokesperson told Ars that “Shein makes import compliance a top priority, including the reporting requirements under US law with respect to de minimis entries.”
Last year, Shein executive vice chairman Donald Tang proposed what he thought would be good de minimis reforms “to create a level, transparent playing field.” In a letter to an American trade association representing more than 1,000 famous brands, the American Apparel and Footwear Association, Tang called for applying the same rules evenly, no matter where a company is based or ships from.
This would enhance consumer trust, Tang suggested, while creating “an environment that allows companies to compete on the quality and authenticity of their product, the caliber of their business models, and the performance of their customer service, which has always been at the heart of American enterprise.”
