The Biden administration’s proposed elimination of the “de minimis loophole” could lead to a 20% price increase on products from popular Chinese-linked retailers Shein and Temu. This loophole exempts packages valued under $800 from import duties, a factor under scrutiny by the U.S. government. While the companies deny that their low prices are tied to the exemption, experts suggest that price hikes are likely, reducing their competitive edge against rivals like H&M and Zara.
The de minimis exemption, in place since the 1930s, has allowed Shein and Temu to offer extremely low prices on fast fashion items, attracting a large U.S. consumer base. If removed, Shein’s prices would become comparable to competitors, which could slow their market growth. Meanwhile, both companies face additional scrutiny over labor practices, adding to their challenges.
Lawmakers are pushing for trade law reform, aiming to create a fairer market environment. The impact of the policy shift, however, would likely lead to increased consumer costs and could jeopardize Shein’s plans for a U.S. IPO, forcing it to seek alternatives in London.
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