New US Shipping Regulations Target Low-Value Imports from China, Affecting Shein and Temu

The Biden administration has proposed new regulations that could significantly impact many low-value imports from China, targeting popular shopping platforms like Shein and Temu. This move aims to address concerns about the exploitation of tariff exemptions on packages worth less than $800 (£600) that enter the US without incurring additional fees.

The proposed rules seek to eliminate the “de minimis” exemption, which has been a boon for e-commerce platforms that ship directly from manufacturers to consumers. By raising the threshold for tariff-free imports, the US government intends to prevent abuse of this policy and reduce the competitive advantage these companies have enjoyed due to their low prices.

In 2016, the US raised the de minimis exemption from $200 to $800 to streamline trade and allow customs officials to focus on higher-priority shipments. However, with companies like Shein and Temu rapidly expanding their presence in the US market, lawmakers have expressed increasing concern over the potential misuse of this exemption.

Under the new proposal, the exemption would be removed for Chinese goods that are currently subject to tariffs, including a wide range of items such as shoes, machinery, and approximately 70% of textiles and apparel. The rules would also impose stricter information requirements on shippers, enhancing transparency and oversight.

Temu defended its business model, attributing its success to an “efficient business model that cuts out unnecessary middlemen,” which allows the company to offer lower prices to consumers. Temu stated it is reviewing the new rules and remains committed to providing value to its customers, emphasizing that its growth is not dependent on the de minimis policy.

Shein also defended its approach, asserting that its success is rooted in its “on-demand business model.” The company supports reforms to the de minimis exemption, provided they are applied fairly. Shein highlighted its commitment to compliance and its participation in a trial program with US Customs and Border Protection (CBP) to enhance transparency. “We want to disclose more of what’s in every package and are working closely with CBP,” Shein said.

Both Temu and Shein have gained prominence through high-profile advertising campaigns and remarkably low prices. Their rapid growth has placed significant pressure on established e-commerce giant Amazon, which is reportedly considering launching its own discount unit focused on direct-to-consumer shipments.

The rise of these platforms has drawn scrutiny from US regulators and politicians. Concerns have been raised about product safety and the potential use of forced labor in manufacturing. Additionally, the surge in de minimis shipments—from 140 million in 2013 to over 1 billion last year—has strained US border and customs operations.

Commerce Secretary Gina Raimondo stated that “several China-founded e-commerce platforms” now account for a significant portion of shipments under the $800 threshold. She criticized these companies for exploiting the de minimis exemption to evade tariffs and regulatory scrutiny. “American workers and businesses can outcompete anyone on a level playing field, but for too long, Chinese e-commerce platforms have skirted tariffs by abusing the de minimis exemption,” Raimondo said.

The American Action Forum, a right-leaning policy organization, estimates that eliminating the $800 exemption entirely could result in additional annual costs of $8 billion to $30 billion, which would ultimately be passed on to consumers.

The proposed regulations are currently in the comment period phase before they are finalized and implemented. Similar measures targeting low-value shipments are also being explored by authorities in the European Union.

Following the announcement, shares of PDD Holdings, the parent company of Temu, experienced a decline of more than 2%. The new rules are set to reshape the landscape for low-value imports, impacting both consumers and e-commerce businesses as the US seeks to address its trade and regulatory challenges.