Shein and Temu expected to see major price hikes – but rival retailer sells the same goods and won’t be impacted

FAST-fashion retailers Shein and Temu are likely to see major price increases as the economic landscape shifts under the back-and-forth tariffs of the trade war.

As these China-based e-commerce giants are threatened by an executive order under President Donald Trump, another popular apparel retailer is flying high.

3

3

The trade war has seen tariffs imposed on a wide range of imported goods, including a base 10% levy on imports from numerous countries, with some facing even higher rates.

Trump then suspended tariffs beyond the base 10% for 75 countries, including India and members of the EU, for 90 days to permit trade negotiations.

However, the suspension does not apply to China, which now faces a tariff rate of 145%.

Major exporters in China’s e-commerce industry, including Shein and Temu, are facing even more pressure due to the impending closure of the de minimis exemption loophole.

The de minimis exemption previously permitted packages valued under $800 to enter the US tax-free and with minimal customs inspections.

However, an executive order on trade will eliminate the exemption for packages under $800 arriving from China and Hong Kong beginning on May 2.

From then on out, goods shipped through commercial channels will face standard tariffs.

Goods shipped through international postal mail will be subject to a tariff of 30% of the value or a per-item fee of $25, whichever is greater.

The fee will increase to $50 per item on June 1.

While China-based fast fashion retailers are bracing for the impact of the trade changes, online consignment and thrift store ThredUp is celebrating.

The company “applauds” the closure of the de minimis exemption as eliminating “an unfair advantage to fast fashion retailers,” it shared in a statement last week.

ThredUp criticized the “cheaply produced, disposable clothing imported from China,” and praised the end of de minimis shipping as “a critical step in addressing the unsustainable flow of ultra-fast fashion into the US.”

“We believe that making fast fashion more expensive will incentivize consumers to choose quality, durability, and secondhand options,” concluded the sustainability-focused retailer.

FAST FASHION’S FATE

The elimination of the de minimis exemption will deeply impact platforms such as Shein and Temu, which have relied heavily on the ability to ship low-cost goods directly to American consumers.​

These two e-commerce giants comprise 17% of the discount US market, per a congressional report on China’s e-commerce exports, with their business models heavily reliant on the de minimis shipments.

Roughly one billion packages from these sellers were able to enter the US in 2023 thanks to the tax exemptions and minimal restrictions, according to the report.

Eliminating the de minimis loophole may have far-reaching impacts on how consumers in America shop.

Roughly 80% of e-commerce shipments to America in 2022 were de minimis imports with the vast majority coming from China, per the congressional research report.

Fast fashion retailers like Temu and Shein are not the only ones fretting under the current trade conditions.

Consumers have already begun shifting their shopping behavior.

For example, shoppers are stocking up on five grocery items before prices skyrocket from tariffs.

However, some retail executives, such as the former CEO of Home Depot, have argued that the US will benefit in the long term from the trade shifts.

3