• Education
    • Higher Education
    • Scholarships & Grants
    • Online Learning
    • School Reforms
    • Research & Innovation
  • Lifestyle
    • Travel
    • Food & Drink
    • Fashion & Beauty
    • Home & Living
    • Relationships & Family
  • Technology & Startups
    • Software & Apps
    • Startup Success Stories
    • Startups & Innovations
    • Tech Regulations
    • Venture Capital
    • Artificial Intelligence
    • Cybersecurity
    • Emerging Technologies
    • Gadgets & Devices
    • Industry Analysis
  • About us
  • Contact
  • Advertise with Us
  • Privacy & Policy
Today Headline
  • Home
  • World News
    • Us & Canada
    • Europe
    • Asia
    • Africa
    • Middle East
  • Politics
    • Elections
    • Political Parties
    • Government Policies
    • International Relations
    • Legislative News
  • Business & Finance
    • Market Trends
    • Stock Market
    • Entrepreneurship
    • Corporate News
    • Economic Policies
  • Science & Environment
    • Space Exploration
    • Climate Change
    • Wildlife & Conservation
    • Environmental Policies
    • Medical Research
  • Health
    • Public Health
    • Mental Health
    • Medical Breakthroughs
    • Fitness & Nutrition
    • Pandemic Updates
  • Sports
    • Football
    • Basketball
    • Tennis
    • Olympics
    • Motorsport
  • Entertainment
    • Movies
    • Music
    • TV & Streaming
    • Celebrity News
    • Awards & Festivals
  • Crime & Justice
    • Court Cases
    • Cybercrime
    • Policing
    • Criminal Investigations
    • Legal Reforms
No Result
View All Result
  • Home
  • World News
    • Us & Canada
    • Europe
    • Asia
    • Africa
    • Middle East
  • Politics
    • Elections
    • Political Parties
    • Government Policies
    • International Relations
    • Legislative News
  • Business & Finance
    • Market Trends
    • Stock Market
    • Entrepreneurship
    • Corporate News
    • Economic Policies
  • Science & Environment
    • Space Exploration
    • Climate Change
    • Wildlife & Conservation
    • Environmental Policies
    • Medical Research
  • Health
    • Public Health
    • Mental Health
    • Medical Breakthroughs
    • Fitness & Nutrition
    • Pandemic Updates
  • Sports
    • Football
    • Basketball
    • Tennis
    • Olympics
    • Motorsport
  • Entertainment
    • Movies
    • Music
    • TV & Streaming
    • Celebrity News
    • Awards & Festivals
  • Crime & Justice
    • Court Cases
    • Cybercrime
    • Policing
    • Criminal Investigations
    • Legal Reforms
No Result
View All Result
Today Headline
No Result
View All Result
Home World News Us & Canada

The U.S. tax loophole that made Shein and Temu rich is changing. What will happen to the brands now?

May 2, 2025
in Us & Canada
Reading Time: 8 mins read
A A
0
The U.S. tax loophole that made Shein and Temu rich is changing. What will happen to the brands now?
5
SHARES
10
VIEWS
Share on FacebookShare on Twitter


For years, Shein and Temu used a U.S. tax loophole to keep their costs low and send items to the country ultra-quickly.

Not anymore.

U.S. President Donald Trump signed an executive order on April 2 to end the de minimis exemption — a rule that allows small packages worth less than $800 US to enter the U.S. tax free — for packages from China and Hong Kong, effective Friday.

The de minimis rule exists to prevent customs agents from spending too much time processing small packages that don’t yield much money for the government in import taxes. But now, the Trump administration is reversing the rule for imports from China, saying the exemption has allowed illegal drugs to come into the country. 

Companies like Shein and Temu, both of which were founded in China, have used the rule to their advantage, shipping orders to the U.S. as individual packages rather than bringing shipping crates full of items in, storing them in warehouses and distributing to consumers from there, as most retailers do.

The exemption is a big part of what helped keep Shein and Temu’s prices so low, according to Samuel Roscoe, a lecturer in supply chain and operations management at the University of British Columbia’s business school.

WATCH | Why a U.S. tax move aimed at China could punish Canadians and Americans: 

Why a U.S. tax move aimed at China could punish Canadians and Americans

The U.S. has ended the de minimis tax exemption allowing duty-free shipping of packages from China worth under $800. As a result, Canadian companies using Chinese materials could see costs shoot up for them, and their U.S. customers.

“I would expect them to take a significant hit, but still trying to compete in the United States,” Roscoe said.

But while price increases, supply chain factors and a possible slowing of packages at the border will be obstacles, experts say the hits won’t take out the companies completely, nor the fast fashion model they accelerated.

Price increases already taking effect 

As of Friday, small packages under $800 US in value entering the U.S. from China will be subject to duties of 120 per cent, or a $100 flat rate fee. The flat rate is set to rise to $200 as of June 1. 

Assuming the company passed on most or all of that duty to consumers, the cost of items on Shein and Temu’s sites could more than double for Americans.

Both Shein and Temu have already announced price increases due to tariffs, which came into effect last week. An analysis by Bloomberg found that products on Shein’s U.S.-facing site had increased by as much as 377 per cent in some cases, and by an average of eight per cent for women’s clothing.

Temu has also added “import charges” to items on their site of about 145 per cent, according to CNBC. Its analysis shows that an $18.47 US sundress will now cost $44.68 after import charges, for example.

A woman uses a mobile phone as people shop at fast-fashion brand Shein’s pop-up store in Ottawa. Shein and Temu have marketed heavily to consumers in the West, where ultra-cheap prices have attracted shoppers. (Blair Gable/Reuters)

Canadians aren’t likely to see any price increases today, Roscoe says, given there are no changes coming to import rules or duties between our country and China. (There is a similar de minimis exemption in Canada for packages under $20, $40 or $150 in value, depending on where the package is being shipped from.)

At the time of writing, prices on Shein and Temu’s Canadian sites appeared to be unchanged.

Despite the increased charges in the U.S., Roscoe says this doesn’t take the Chinese e-commerce sites out of the game.

“Even if their prices go up by one and a half times, they’re still competitive with the retail stores in North America,” Roscoe said.

He gives the example of a $10 bikini on one of the platforms that might cost $22 or so after the tariffs come in. Bikinis from H&M, Zara and Abercrombie are still much more expensive, at averages of $50, $80 and $120, respectively, meaning Shein and Temu will still have room to compete in the U.S. market.

Low-income Americans likely stand the most to lose from a price increase, according to Sheng Lu, an assistant professor of fashion and apparel studies at the University of Delaware. He says basics like t-shirts and socks might see the biggest price jumps because they’re staples shoppers are likely to buy even if they become more expensive.

In the past, competition with Shein and Temu has also kept prices at other fast fashion retailers down, according to Lu. Now that the Chinese e-commerce giants are raising their prices, Lu says it might allow other brands to up theirs as well without fear of losing customers.

Supply chain issues also a factor

The tariff hit and disappearance of the de minimis loophole also poses a host of supply chain issues for Temu and Shein, according to both Roscoe and Lu.

While neighbouring countries like Vietnam and Cambodia are facing tariffs far lower than China’s, Lu says simply shifting production to these other nations isn’t so simple. 

For one, those kinds of shifts take a lot of time and money. Lu says its unlikely the companies will commit to switching where they manufacture their products any time soon, given how back and forth Trump’s tariff policy has been so far.

LISTEN | Will Trump’s tariffs mean the end of cheap online fashion?: 

The Current11:06Will Trump’s tariffs mean the end of cheap online fashion?

He says Chinese factories can also make a variety of products, and in small batches. Companies like Shein design a product and generally make a few hundred of it initially to see how well they sell before making more. Lu says Chinese factories are accommodating to this practice, whereas factories elsewhere typically have a minimum quantity of 3,000 or 4,000 for orders.

“They rely on factories in China based on their very sophisticated and integrated local supply chain to make such products, [so] it’s not easy to remove the production out of China,” Lu said.

The new rule will also likely hamper how quickly products come into the country, Lu says. The de minimis rule allowed these small packages under $800 US to avoid processing by border agents upon arrival from China. But taking away the rule means they’ll be subject to all checks.

He says around one million small packages come into the U.S. every day under de minimis right now, so that added processing could impact how quickly people get packages that consumers expect to receive in a matter of days.

In order to make up for the potential loss of business, Roscoe says Temu and Shein will likely push into other markets that don’t have high tariffs — like Canada, for example.

“We’re probably going to see a lot of targeted advertising to Canadians,” Roscoe said. 

Lu says that kind of expansion will help, but adds that no retailer can realistically stand to lose access to the U.S. market.

“We simply do not have another market out there that can be as large and as lucrative,” Lu said.

WATCH | Trade war: How far will China go to beat the U.S.?: 

Trade war: How far will China go to beat the U.S.?

The U.S.-China trade war is in full swing, with neither side showing signs of backing down. Andrew Chang explains how China is positioned to absorb the shock of U.S. tariffs and what this global economic disruption could mean for their place in the world order.
Images provided by Getty Images, The Canadian Press and Reuters.

Sustainability win? Think again

With fast fashion costs rising as a result of tariffs, some reports have suggested this could push consumers toward the resale market or to buy less in general — making it a win for sustainability.

Lu said his Gen Z students (part of the core demographic for companies like Shein) have said that price increases for cheap clothes would lead them to buy less or shop second-hand in an attempt to dodge the tariffs. 

But the added import taxes might actually exacerbate current sustainability issues that Shein and Temu have faced, says Anika Kozlowski, an assistant professor of design studies at the University of Wisconsin-Madison who researches sustainable fashion. It could result in the companies using even cheaper inputs, which tend to be less sustainable, to try and keep costs low, she says.

She says the cost of clothing repairs might go up as parts like buttons or zippers, which tend to be imported, will also get more expensive — a possible hit to the second-hand clothing market as well. If there’s more demand and economic pressure at second-hand stores, too, Kozlowski says sellers might also raise prices as a result, making this sustainable option less desirable to shoppers.

LISTEN | How Shein took over the world — one $2 shirt at a time: 

Cost of Living9:46How Shein took over the world — one $2 shirt at a time

As a whole, Kozlowski says tariffs won’t disrupt fast fashion because they don’t address the root cause — our desire for ultra-cheap stuff.

“We’re still going to have a culture of consumption,” Kozlowski said. “It doesn’t break that addiction.”

She says any real solutions will have to start there — as does Roscoe.

Roscoe says Shein and Temu came along and supercharged the fast fashion model that companies like Zara started in the late ’90s. Whereas a fast fashion garment used to take months to go from a concept to a real product, Shein in particular can turn around a new item in as little as 25 days, making the churn of the clothing industry even more rapid than in the past.

Roscoe says slowing this pace would require efforts such as government legislation against wasteful and exploitative processes, as well as consumer boycotts of brands that take part in those practices.



Source link

Previous Post

Algeria weighs French embassy land seizure after new Harkis law

Next Post

Reddit stock slides as investors weigh Google Search traffic, user growth concerns

Related Posts

President Trump set to give commencement address to West Point graduates

President Trump set to give commencement address to West Point graduates

May 24, 2025
3
Pacers take 2-0 lead over Knicks as Pascal Siakam scores 39 points in 114-109 victory

Pacers take 2-0 lead over Knicks as Pascal Siakam scores 39 points in 114-109 victory

May 24, 2025
4
Next Post

Reddit stock slides as investors weigh Google Search traffic, user growth concerns

  • Trending
  • Comments
  • Latest
Family calls for change after B.C. nurse dies by suicide after attacks on the job

Family calls for change after B.C. nurse dies by suicide after attacks on the job

April 2, 2025
Pioneering 3D printing project shares successes

Product reduces TPH levels to non-hazardous status

November 27, 2024

Hospital Mergers Fail to Deliver Better Care or Lower Costs, Study Finds todayheadline

December 31, 2024

Police ID man who died after Corso Italia fight

December 23, 2024
Harris tells supporters 'never give up' and urges peaceful transfer of power

Harris tells supporters ‘never give up’ and urges peaceful transfer of power

0
Des Moines Man Accused Of Shooting Ex-Girlfriend's Mother

Des Moines Man Accused Of Shooting Ex-Girlfriend’s Mother

0

Trump ‘looks forward’ to White House meeting with Biden

0
Catholic voters were critical to Donald Trump’s blowout victory: ‘Harris snubbed us’

Catholic voters were critical to Donald Trump’s blowout victory: ‘Harris snubbed us’

0
Aichi police arrest Nagoya teen for involvement in Myanmar fraud ring

Aichi police arrest Nagoya teen for involvement in Myanmar fraud ring

May 24, 2025
EU vows to defend interests after Trump threatens 50 percent tariffs

EU vows to defend interests after Trump threatens 50 percent tariffs

May 24, 2025
Druze ex-minister Kara discusses Israeli relations with Iraq, Syria

Druze ex-minister Kara discusses Israeli relations with Iraq, Syria

May 24, 2025
Monsoon reaches Kerala; marks earliest onset in over a decade

Monsoon reaches Kerala; marks earliest onset in over a decade todayheadline

May 24, 2025

Recent News

Aichi police arrest Nagoya teen for involvement in Myanmar fraud ring

Aichi police arrest Nagoya teen for involvement in Myanmar fraud ring

May 24, 2025
3
EU vows to defend interests after Trump threatens 50 percent tariffs

EU vows to defend interests after Trump threatens 50 percent tariffs

May 24, 2025
4
Druze ex-minister Kara discusses Israeli relations with Iraq, Syria

Druze ex-minister Kara discusses Israeli relations with Iraq, Syria

May 24, 2025
3
Monsoon reaches Kerala; marks earliest onset in over a decade

Monsoon reaches Kerala; marks earliest onset in over a decade todayheadline

May 24, 2025
4

TodayHeadline is a dynamic news website dedicated to delivering up-to-date and comprehensive news coverage from around the globe.

Follow Us

Browse by Category

  • Africa
  • Asia
  • Basketball
  • Business & Finance
  • Climate Change
  • Crime & Justice
  • Economic Policies
  • Elections
  • Entertainment
  • Entrepreneurship
  • Environmental Policies
  • Europe
  • Football
  • Gadgets & Devices
  • Health
  • Medical Research
  • Mental Health
  • Middle East
  • Motorsport
  • Olympics
  • Politics
  • Public Health
  • Relationships & Family
  • Science & Environment
  • Software & Apps
  • Space Exploration
  • Sports
  • Stock Market
  • Technology & Startups
  • Tennis
  • Travel
  • Uncategorized
  • Us & Canada
  • Wildlife & Conservation
  • World News

Recent News

Aichi police arrest Nagoya teen for involvement in Myanmar fraud ring

Aichi police arrest Nagoya teen for involvement in Myanmar fraud ring

May 24, 2025
EU vows to defend interests after Trump threatens 50 percent tariffs

EU vows to defend interests after Trump threatens 50 percent tariffs

May 24, 2025
  • Education
  • Lifestyle
  • Technology & Startups
  • About us
  • Contact
  • Advertise with Us
  • Privacy & Policy

© 2024 Todayheadline.co

Welcome Back!

OR

Login to your account below

Forgotten Password?

Retrieve your password

Please enter your username or email address to reset your password.

Log In
No Result
View All Result
  • Business & Finance
  • Corporate News
  • Economic Policies
  • Entrepreneurship
  • Market Trends
  • Crime & Justice
  • Court Cases
  • Criminal Investigations
  • Cybercrime
  • Legal Reforms
  • Policing
  • Education
  • Higher Education
  • Online Learning
  • Entertainment
  • Awards & Festivals
  • Celebrity News
  • Movies
  • Music
  • Health
  • Fitness & Nutrition
  • Medical Breakthroughs
  • Mental Health
  • Pandemic Updates
  • Lifestyle
  • Fashion & Beauty
  • Food & Drink
  • Home & Living
  • Politics
  • Elections
  • Government Policies
  • International Relations
  • Legislative News
  • Political Parties
  • Africa
  • Asia
  • Europe
  • Middle East
  • Artificial Intelligence
  • Cybersecurity
  • Emerging Technologies
  • Gadgets & Devices
  • Industry Analysis
  • Basketball
  • Football
  • Motorsport
  • Olympics
  • Climate Change
  • Environmental Policies
  • Medical Research
  • Science & Environment
  • Space Exploration
  • Wildlife & Conservation
  • Sports
  • Tennis
  • Technology & Startups
  • Software & Apps
  • Startup Success Stories
  • Startups & Innovations
  • Tech Regulations
  • Venture Capital
  • Uncategorized
  • World News
  • Us & Canada
  • Public Health
  • Relationships & Family
  • Travel
  • Research & Innovation
  • Scholarships & Grants
  • School Reforms
  • Stock Market
  • TV & Streaming
  • Advertise with Us
  • Privacy & Policy
  • About us
  • Contact

© 2024 Todayheadline.co