The Biden administration has proposed rules that could make it more expensive for Chinese e-commerce platforms such as Shein and Temu to ship goods to the US.
In his announcement proposing to crack down on “unsafe, unfairly traded products,” President Joe Biden accused China-based e-commerce platforms selling cheap goods of abusing the “de minimis exemption” that makes shipments worth less than $800 duty-free.
Platforms that use the exemption will be able to share less information about packages and avoid paying taxes. Biden warned that “over the last 10 years, the number of shipments coming into the United States claiming the minimum exemption has increased significantly, from approximately 140 million per year to over 1 billion per year.” And the “majority of shipments entering the United States claiming the minimum “The exemptions come from several e-commerce platforms founded in China,” Biden said.
As a result, America has been awash with “massive quantities of low-value products like textiles and apparel” that compete in the “duty-free” marketplace, Biden said. And that “makes it increasingly difficult to target and block illicit or unsafe shipments” that are likely lost in the flood.
Biden argued that allowing this alleged abuse to continue would not only hurt U.S. companies like H&M and Zara, which have increasingly struggled to compete with platforms like Shein and Temu. It would also make it “harder to enforce U.S. trade laws, health and safety requirements, intellectual property rights, consumer protection rules, and to block illicit synthetic drugs like fentanyl and synthetic drug raw materials and machinery from entering the country.”
Raising import duties could make cheap goods shipped from China more expensive, potentially pushing up prices for consumers who have flocked to Shein and Temu to buy groceries as the pandemic strains families’ wallets and the economy.
Biden has specifically proposed to minimum exemption for all shipments “that contain products subject to tariffs imposed under sections 201 or 301 of the Trade Act of 1974, or section 232 of the Trade Expansion Act of 1962.” That, Biden specified, would include “some e-commerce platforms and other foreign sellers” who are currently “circumventing 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 about shipments, “including the 10-digit tariff classification number and the person claiming the de minimis exemption.” That would help prevent unlawful minimum shipments, Biden suggested.
Shein and Temu defend business models
Neither Shein nor Temu appear willing to let the proposed guidelines slow their rapid growth.
“Since Temu’s launch in September 2022, our mission has been to provide consumers with a wider selection of quality products at affordable prices,” the Temu 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 assessing the new regulations and “remains committed to providing value to consumers.”
“Temu's growth is not dependent on the minimum “, Temu's spokesperson told Ars.
Shein doesn’t seem fazed by the announcement, either. Starting this year, Shein began voluntarily sharing additional information about its low-value shipments to the U.S. as part of a pilot program by U.S. Customs and Border Protection (CBP). That change comes after CBP expanded the pilot last year in its mission to test ways to “identify and target high-risk shipments for inspection while expediting the processing of legitimate trade flows.”
A Shein spokesperson told Ars that “Shein makes compliance with import regulations a top priority, including the reporting requirements under U.S. law regarding de minimis imports.”
Last year, Shein Executive Vice President Donald Tang proposed what he called good de minimis reforms “to create a level and transparent playing field.” In a letter to a U.S. trade association representing more than 1,000 well-known brands, the American Apparel and Footwear Association, Tang called for the same rules to be applied uniformly, regardless of where a company is based or where it ships products from.
Tang suggested this would increase consumer confidence while “creating an environment where companies can compete on the quality and authenticity of their product, the caliber of their business models and the performance of their customer service, which have always been core to American business.”
