CONSUMERS who frequently buy from fast-fashion websites like Shein and Temu might not escape higher prices.
Each brand is known for selling clothes, furniture, and other merchandise for low costs and predominantly free shipping.
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Those benefits are anticipated to change as the trade war between the United States and China has led to far higher import tariffs than initially expected.
Trillions of dollars have already been slashed from global markets in the ongoing back-and-forth.
Despite President Donald Trump’s decision on Wednesday to pause the severe global reciprocal tariffs he announced on April 2, China was still hit with a 125% tax.
China has also pledged to tax American products at 84% this week in response.
A considerable portion of the clothes, furniture, and other merchandise available for Americans to purchase through Shein and Temu are from Chinese-based manufacturers and sellers.
In 2023, Shein and Temu also accounted for at least 17% of the discount market in the United States, as noted in a report from the Congressional Research Service.
Despite the trade war, Shein and Temu were initially expected to narrowly escape the effects of the tariffs thanks to a loophole put in place 87 years ago.
It’s known as the “de minimis exemption,” and concerns Section 321 of the Tariff Act of 1930, per USA Today.
The exemption allows the Secretary of the Treasury to waive select duties or fees on imports where it would be more inconvenient to collect than the revenue it would bring in for the United States.
Basically, it allows low-value goods from countries to be shipped to America “duty-free” or free of tariffs.
It was officially implemented in 1938 to reduce taxes on imported goods with a value of less than $1, but as inflation increased, so did the value maximum.
By 1978 it was $8, in 1993 it was $200, and just 10 years ago, in 2015, it was $800.
In recent years, about half of imports with de minimis exemptions are from China, and more than 30% of daily packages with the exemption are coming into the United States directly from Shein and Temu, per Reuters.
While the exemption has benefited American consumers who place orders from fast-fashion sites and was expected to continue, it’s set to disappear in just days.
What items will be affected by the tariffs?
AMERICANS should prepare to see significant prices changes on everything from avocados to cars under President Donald Trump’s new global tariffs.
Here is a list of some of the everyday products that could see a massive price tag surge.
- Coffee
- Tea
- Bananas
- Foreign-made cars
- Sneakers
- Furniture and other home goods
- Pharmaceuticals
- Video games
- Clothing
- Toys
- Washers and dryers
- Avocados
- Housing materials
GONE FOR GOOD
The de minimis exemption on Chinese imports will end at midnight on May 1, 2025, according to an announcement from the White House.
After the deadline, any packages from China valued below $800 will be taxed at 90% of their value.
Assuming that’s $800, it calculates to about $75 per item.
By June 1, it will be $150 per item, and it’s unclear if the added hike of 125% from President Trump on Wednesday will affect it further.
The President initially axed the de minimis exemption days after his inauguration but opened it in February because a collection system wasn’t in place to collect the revenue from the tariffs.
Not only could the removal of the de minimis exemption for China lead to higher prices passed onto consumers, but shipping times could also be longer, per what Juozas Kaziukenas, founder of Marketplace Pulse, told the Associated Press in February.
That’s because commercial mail agencies like FedEx and UPS are required to report shipment information to the United States Customs and Border Protection (CBP).
ADAPTING FAST
Still, Hilton Beckham, assistant commissioner of the CBP, emphasized that the federal agency is prepared.
“Our automated systems are fully updated to capture, assess, and administer all new duties, and clear guidance will be provided to support uniform enforcement across the nation,” Beckham explained while speaking to the Associated Press earlier in April.
Shein and Temu are also already adapting, according to Reuters.
Each company is sourcing products from outside of China and making plans to break ground on warehouses in the United States.
Consumers could also see prices increase on at least five grocery items in the coming months.
Amid the concern, however, some executives like the former CEO of Home Depot argued that America would benefit in the “long-term” from the Trump administration’s move.